Investors aiming to benefit from the next group of market leaders frequently use a two-part method, merging the prospective focus of fundamental analysis with the timing cues from technical patterns. One specific tactic involves searching for solid growth stocks that are also showing encouraging technical breakout formations. The reasoning is clear: find firms with sturdy and speeding business foundations, like sales and earnings expansion, firm profitability, and a sound financial position, and then seek a confirming sign in the price chart that indicates institutional buying and a possible change in momentum. This combination can point out chances where a company's inherent quality is starting to be acknowledged by the wider market.
On Holding AG-Class A (NYSE:ONON) offers a notable example for this method. The Swiss performance sportswear company, recognized for its novel running shoes and clothing, has secured a considerable position in a crowded field. An examination of its fundamental and technical picture shows why it recently appeared in a search for solid growth stocks with positive technical formations.
Fundamental Growth Driver
The center of the investment case for ONON depends on its outstanding growth path, which is a main criterion in the search tactic. A company cannot maintain a breakout without the energy of growing revenues and earnings. According to ChartMill's fundamental analysis report, ONON's growth measures are prominent:
- Strong Historical Growth: Revenue has expanded at an average pace of 54.06% over recent years, with a 33.26% rise in the past year alone. Earnings Per Share (EPS) jumped by 68.42% over the last year.
- Positive Forward Projection: Analysts anticipate this pace to persist, with estimated annual EPS growth of 25.04% and revenue growth of 22.91% in the near future.
- Supporting Basics: This growth is supported by high profitability margins (a Gross Margin of 61% beats 80% of its industry competitors) and very good financial condition, marked by a sound financial position with little debt worry.
These numbers result in a ChartMill Growth Rating of 8 out of 10, firmly putting ONON in the "solid growth" group the search targets. The company is effectively increasing its operations and turning sales into profits, a required condition for a lasting growth investment.
Technical Breakout Formation
While solid fundamentals spot the possibility for success, technical analysis assists in measuring the market's present mood and timing. A breakout formation implies that a time of sideways movement or decline is yielding to fresh buying interest, often with higher trading volume. ONON's technical analysis report shows such a formation is taking shape.
Important technical notes consist of:
- Change in Short-Term Trend: The report states that while the long-term trend stays neutral, the short-term trend has become positive. This is the first sign that breakout searches try to find.
- Nearing a Price Barrier: The stock is presently trading close to the top of its one-month range ($34.38 - $45.38), indicating it is challenging a point that might lead to a clear move.
- Defined Points to Monitor: The technical report spots nearby resistance near $44.69. A continued move above this point on notable volume could be seen as a real breakout, possibly clearing the way for increased prices.
The existence of this technical formation, paired with the stock's high relative strength and considerable average trading volume (providing adequate liquidity), offers the matching "signal" that growth investors seek to choose their entry point.
Valuation and Points to Note
It is necessary to recognize that good growth frequently carries a higher price. ONON's valuation measures show this, with a Price-to-Earnings (P/E) ratio above the industry and S&P 500 norms. The fundamental report gives a Valuation Rating of only 2 out of 10. This higher multiple means the stock is very reactive to any shortfall in its future growth rates. Investors need to be confident that the company can achieve or surpass the high forecasts included in its present price.
Also, the technical view, while getting better, is not free of warning. The stock has performed much worse than the wider market over the past year and stays below its main long-term moving averages. Any breakout try needs to be watched for confirmation; a stumble at resistance could cause the price to fall back into its recent range.
Conclusion
On Holding AG illustrates the kind of company a growth-and-breakout search is made to find. It has a potent fundamental growth narrative, fueled by strong brand progress and financial results, which meets the "solid growth" requirement. At the same time, its price movement is displaying early hints of a possible upward turn, satisfying the "positive technical formation" condition. This pairing hints the market might be in the first phases of revaluing the stock to match its operational achievements.
For investors using this tactic, ONON presents a candidate deserving of more detailed investigation. The next vital action would be to look for a verified breakout above the identified resistance point, which would reinforce the technical argument significantly.
This review of ONON was produced using a tactic that looks for stocks with comparable pictures. You can examine other possible candidates that fit these conditions of solid fundamentals and technical formations through this pre-configured stock screen.
Disclaimer: This article is for informational and educational purposes only and does not constitute a recommendation to buy, sell, or hold any security. The analysis is based on data and reports provided by third parties. Investing in stocks involves risk, including the potential loss of principal. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
