ON HOLDING AG (NYSE:ONON) Shows Strong Growth and a Bullish Technical Setup

ON HOLDING AG-CLASS A (NYSE:ONON) has appeared as a candidate through a screening method that looks to find companies displaying both solid fundamental growth and favorable technical chart patterns. This dual method tries to find stocks with the basic business momentum to support continued price gains, while also identifying times when the market's technical picture indicates a possible breakout is near. The method selects for companies displaying good growth metrics, acceptable profitability, and sound financial health to confirm fundamental quality, and then adds a technical setup rating to find those stocks that seem to be consolidating and getting ready for a new upward move.

Strong Growth Fundamentals

The center of this investment thesis for On Holding depends on its notable growth path, which is a main requirement in the screening process. A company's capacity to grow its earnings and revenue at a fast rate is a main sign of its potential to do better than the market. On Holding's fundamental report highlights its strength in this area.

• Outstanding Revenue Growth: The company has shown very fast top-line growth, with revenue rising by 35.67% over the last year. Even more notable is its long-term history, showing an average yearly revenue growth of 54.06% over recent years.
• Positive Future Outlook: This solid growth is anticipated to persist, with analysts forecasting yearly revenue growth of 22.78% and earnings per share (EPS) growth of 27.16% in the next few years. This future growth possibility is important for supporting its present valuation.
• High Profitability Margins: Supporting this growth are very good operational efficiencies. On Holding's gross margin of 61.00% is better than over 81% of its competitors in the Textiles, Apparel & Luxury Goods industry, and its operating margin of 10.87% is also well above average.

These metrics create an image of a company that is not only growing fast but also doing so profitably. This mix of high growth and good margins is exactly what the screening method aims to find to identify companies with lasting momentum. You can examine the complete details in the fundamental analysis report for ONON.

Financial Health and Valuation

Beyond just growth, the screening process focuses on financial health to steer clear of companies that have too much debt or are financially weak. On Holding performs well here, with a ChartMill Health Rating of 7 out of 10. The company shows a sound balance sheet with a good current ratio of 2.53 and a low debt-to-equity ratio of 0.31, suggesting it has the financial strength to handle market changes and put money into future growth.

The most significant point of debate is its valuation. With a Price-to-Earnings (P/E) ratio of 55.60, the stock is clearly high-priced compared to both the wider S&P 500 and many industry competitors. However, within the framework of growth investing, a high valuation can sometimes be supported by very high growth rates. The screen recognizes this by needing "acceptable" profitability and health to counterbalance the high growth, making sure that the company has the financial base to possibly grow into its valuation over time.

Technical Setup for a Breakout

While the fundamentals give the "why," the technical analysis gives the "when." The technical analysis report for ONON shows a favorable setup, getting a high Setup Rating of 7 out of 10, even with a lower overall technical rating. This difference points out a key situation: a stock that has been in a longer-term decline but is now displaying indications of forming a base and possible turnaround.

• Consolidation Phase: The stock has been trading in a fairly narrow range between about $42 and $47 over the last month, suggesting a time of consolidation after earlier drops.
• Key Resistance Level: The most important and close resistance area is found just above the present price, ranging from $45.60 to $45.78. This area is created by a mix of trendlines, making it a crucial level to observe.
• Breakout Signal: The method indicates that a clear move above this resistance area could signal the beginning of a new upward trend. The report also mentions higher buying interest from big investors lately, which can be a sign of a coming breakout.

This technical view is exactly what the screen is made to find: a fundamentally sound company that is technically set up for a possible positive move. The consolidation lets the stock reduce some of its earlier overbought state, forming a base from which it can try to move up.

Conclusion

On Holding AG offers an example in the combined fundamental and technical screening method. The company's very fast revenue growth, solid future outlook, and sound balance sheet meet the main needs for a solid growth stock. While its valuation is high, this is often a trait of high-growth companies. Technically, the stock is at a turning point, consolidating below an important resistance level that, if surpassed, could signal a change in momentum. For investors using a growth-at-a-reasonable-price method with a timing element, ONON deserves further study.

If you are interested in finding other stocks that fit this method of solid growth along with positive technical setups, you can use our stock screener to find more options. Discover more Strong Growth Stocks with good Technical Setup Ratings.

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. Investors should conduct their own research and consider their individual financial circumstances before making any investment decisions.