Investors looking for substantial price gains frequently use a two-part method: finding firms with solid basic growth potential that are also near a technical price move. This tactic tries to combine the long-term outlook of a company with the near-term trend shown by market prices. A stock listed on a "Strong Growth Stocks with good Technical Setup Ratings" screen has met criteria for rising earnings and sales, good financial condition, and acceptable profit margins, while its price chart implies a possible near-term advance. This process tries to locate situations where better company basics might soon be acknowledged and valued by the wider market.
Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) runs a distinct operation in the retail sector, selling brand-name closeout goods at large price reductions. Operating more than 575 stores in 31 states, the firm has established a specialty by giving a "treasure hunt" customer experience. Its capacity to obtain overproduced and surplus stock lets it provide savings to budget-minded shoppers, a stance that can be stable through different economic periods.
Fundamental Growth Evaluation
The center of any growth investment case rests on the firm's financial direction and operational soundness. Based on ChartMill's fundamental analysis report, OLLI displays a positive growth picture, receiving a Growth Rating of 7 out of 10. The evaluation points out a number of important positives:
- Good Past Growth: The firm has shown steady enlargement, with revenue increasing 12.58% in the last year and at a typical yearly pace of 10.04% over recent years. Earnings per share (EPS) have taken a similar rising direction.
- Increasing Pace: Importantly, both revenue and EPS growth paces are forecast to rise in the next few years. Experts predict average yearly EPS growth of 16.41% and revenue growth of 13.56%, showing that the business pace is strengthening.
- Sound Basic Condition: Backing this growth is a very good Financial Health Rating of 7. The firm has a very solid balance sheet with almost no debt, a high Altman-Z score pointing to low bankruptcy chance, and a good current ratio. This financial strength gives OLLI the steadiness to carry out its store growth plans and manage market changes without the strain of interest costs.
For a growth investment plan, these standards are critical. A big target audience for value retail, a clear growth possibility through national store increase, and a leadership team performing with financial order match the qualitative needs for a profitable growth stock. The numerical information verifies the story is becoming financial outcomes.
Valuation and Profitability Background
While the growth account is solid, it is important to see it with consideration of current price and profit. The basic report observes some varied indicators in these parts:
- High Valuation: OLLI's Valuation Rating is a lower 3. Its Price-to-Earnings (P/E) ratio of 30.57 is seen as high in simple terms, although it is nearly matching the wider S&P 500 average. This high level implies the market has already included some amount of future growth.
- Good, but Slowing, Profitability: The firm gets a Profitability Rating of 6. It is strong in some parts, like profit margin, where it does better than over 83% of its broadline retail competitors. Still, the report notes that both operating and profit margins have fallen in recent years, a pattern investors will wish to watch carefully to make sure it does not weaken the earnings growth.
Technical Setup for a Possible Price Move
The basic account prepares the scene, but the technical view gives the possible timing signal. ChartMill's technical analysis report gives OLLI a Setup Rating of 7, pointing out a positive pattern even with a neutral total technical rating.
The stock has been moving sideways in a band between about $105 and $121 over the last month, after a longer-term price decline. This sideways movement shows a time of balance where selling force has lessened, letting a new foundation build. The technical report finds a clear resistance area just above the present price, covering from $112.84 to $115.93. A clear move above this area, especially with greater trading activity, could indicate that purchasers have overtaken sellers and that a new rising part may be starting.
This technical setup is key for the combined plan. It tries to find stocks where solid basics might be close to causing a change in market feeling, pushing the price out of a sideways period and into a directional period. The existence of notable institutional purchaser attention ("large players"), as mentioned in the report, supports the chance for such an action.
Summary
Ollie's Bargain Outlet shows a situation where a solid basic growth account meets a technical chart pattern hinting at a possible turning point. The firm's rising sales and earnings, driven by a tested retail operation and a strong balance sheet, give the base attraction for growth-focused investors. The technical setup, identified by a sideways movement near resistance, gives a specific observation point for those searching for a trend verification to go with the basic case.
For investors using this mixed method, OLLI stands for the kind of candidate the screen is made to locate: a basically healthy grower displaying signals of technical activity.
Interested in examining other stocks that fit this plan of solid growth combined with positive technical setups? You can operate the screen yourself and view the newest outcomes here.
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Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The analysis presented is based on data and reports provided by ChartMill, and investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.
