ON HOLDING AG-CLASS A (NYSE:ONON) Presents a Compelling Growth and Breakout Investment Case

A screening method that uses both fundamental and technical analysis can help find companies with good basic business measures while also locating good entry points based on price movements. This method looks for growth stocks that are not only financially sound and growing quickly but are also coming out of technical consolidation patterns, indicating a chance for a large price change. The plan intends to capture the momentum of a breakout while having support from a good fundamental base.

On Holding AG-Class A (NYSE:ONON) is a Swiss company known for its high-performance footwear, apparel, and accessories, focusing on running, outdoor, and all-day activities. Since its initial public offering in 2021, the company has established a worldwide presence through independent retailers, distributors, and its own direct channels.

Fundamental Growth Profile

The company's fundamental report shows a strong growth story, which is the main part of this investment plan. A good growth profile is important as it shows the company's ability to increase earnings and revenue faster than similar companies, a main factor for long-term stock price increases.

• Exceptional Revenue Growth: ONON has shown very fast top-line expansion, with revenue growing by 35.67% over the past year. More notably, its average yearly revenue growth over recent years is 54.06%.
• Strong Future Expectations: Analysts predict this good momentum will continue, with expected yearly earnings per share (EPS) growth of 27.03% and revenue growth of 22.66% in the next years.
• High Growth Rating: These measures add to the company's good ChartMill Growth Rating of 7 out of 10, showing it is one of the stronger growing companies in its sector.

Financial Health and Profitability

While growth is very important, it must be supported by a stable financial base. The screening process focuses on acceptable profitability and health to make sure the company can maintain its expansion and handle economic slowdowns.

• Strong Financial Health: ONON gets a Health Rating of 7, supported by a very good Altman-Z score of 8.12, showing a very low chance of bankruptcy. The company also keeps a healthy debt profile, with a Debt-to-Equity ratio of 0.31 and a good Current Ratio of 2.53.
• Getting Better Profitability: The company has a Profitability Rating of 6. Key margins are getting stronger, with a Gross Margin of 61% that is better than 81% of its industry peers. Both Operating Margin (10.87%) and Profit Margin (5.00%) are also in the higher range of the Textiles, Apparel & Luxury Goods industry.

Valuation Considerations

The search for high growth often comes with a high valuation. Investors must balance the cost of entry against the possibility for future earnings.

• High Earnings Multiple: ONON trades at a Price-to-Earnings (P/E) ratio of 52.07, which is costly compared to both the industry and the wider S&P 500.
• Growth Reason: This high valuation may be partly explained by the company's exceptional growth rates and improving profitability. The more forward-looking Price/Forward Earnings ratio of 26.72 is nearer to the market average, indicating expectations for large earnings expansion.

Technical Setup and Breakout Potential

The technical analysis finishes the picture by finding a possible catalyst for a price move. Even with a negative overall trend, the chart shows a constructive consolidation pattern.

• Consolidation Phase: After a large decline, the stock's price movement has been consolidating within a set range, a common sign before a new directional move.
• High Setup Rating: ONON has a ChartMill Setup Rating of 8, highlighting a positive technical configuration. The analysis notes that prices have been consolidating lately, with an important support zone found below the current price.
• Breakout Meaning: A clear move above the nearby resistance zone, which goes from $42.19 to $43.36, could signal the start of a new upward trend. This resistance is made by a mix of trendlines and moving averages, making a break above it a technically important event. You can check the detailed technical levels in the full technical analysis report.

Investment Thesis Summary

On Holding AG presents a case of a company with very fast fundamental growth and a good financial foundation, currently trading in a technical position that may offer a positive risk-reward entry point. The stock fits a growth-and-breakout plan by showing:

• Confirmed, strong historical and predicted revenue and earnings growth.
• A healthy balance sheet with low solvency risk.
• A technical chart pattern indicating a possible end to its downtrend and the start of a new upward phase.

For investors looking for other opportunities that fit this specific plan of combining strong growth fundamentals with positive technical setups, you can explore the predefined screen here.

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 information presented is based on data provided and should not be the sole basis for an investment decision. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.