Investors looking for substantial price gains often focus on growth stocks, but determining the best time to buy can be as important as selecting the company. One technique that addresses both of these key elements is searching for solid growth stocks that are also displaying encouraging technical breakout formations. This method links fundamental soundness—showing solid and improving business results—with technical timing, searching for price movement that hints a phase of sideways trading might be ending for a new rising trend. The aim is to locate firms where strong core business progress is about to be acknowledged and valued by the wider market.
ON HOLDING AG-CLASS A (NYSE:ONON) presents an interesting example for this tactic. The Swiss athletic company, recognized for its high-end running shoes and clothing, has secured a notable position in the performance footwear market. Its fundamental picture indicates a business in a solid growth stage, while recent price movement shows a possible technical turning point.
Fundamental Growth Driver
The center of the investment case for ONON is found in its outstanding fundamental growth measures, which are a main criterion in the search strategy. A firm can only maintain a breakout if its business fundamentals justify higher prices. Based on ChartMill's fundamental analysis report, ONON receives a high Growth Rating of 8 out of 10, notably exceeding many others in the Textiles, Apparel & Luxury Goods industry.
The firm's latest financial results highlight this rating:
- Strong Revenue Growth: Revenue increased by 33.26% over the previous year, and the three-year average yearly growth rate is a notable 54.06%.
- Earnings Improvement: Earnings Per Share (EPS) improved by a significant 68.42% in the last year.
- Positive Future Projection: Analysts anticipate this progress to persist, with predicted yearly EPS growth of 25.04% and revenue growth of 22.68% in the next years.
Beyond simple growth, the search also demands acceptable profitability and financial soundness, confirming the growth is of good quality and can last. ONON scores a 6 for Profitability, aided by growing margins—its Operating Margin of 10.87% is better than 80% of its industry competitors. Crucially, it gets a sound Health Rating of 7, showing a solid balance sheet with manageable debt and good liquidity, offering a stable base for further growth.
Technical Position for a Possible Breakout
While solid fundamentals supply the "why," the technical view supplies the "when." The search process specifically seeks positive technical formations that might come before a major price change. ONON's present technical analysis shows an interesting position, receiving a Setup Rating of 7 out of 10 even with a lower total technical score.
The stock has been moving sideways inside a set band over the last month, changing hands between about $44 and $51. This time of lower volatility and horizontal movement frequently comes before a clear move. The stock is now checking the lower limits of this band, staying close to an important support area between $44.84 and $45.04. This area is strengthened by several trendlines from different periods, adding to its importance.
From a trend view, the long-term trend is seen as neutral, while the short-term trend is down. This combined view is typical near the conclusion of a sideways phase. A steady position above the noted support area, followed by a shift back near the top end of the recent band, could indicate the short-term decline is over and a new upward phase is starting. The search finds this specific situation: a solid growth stock resting after a previous rise, possibly gathering strength for its next breakout.
Price and Factors
It is notable that high growth frequently carries a high price. ONON's Valuation Rating of 2 shows this, with a Price-to-Earnings (P/E) ratio of 36.20. While costly compared to the wider S&P 500, this is approximately similar to its industry average. For growth investors, the central question is if the firm's exceptional growth rate validates the high price. The solid expected earnings growth offers a way for the price to become more reasonable over time if performance remains.
The firm's concentration on the high-performance athletic market, a field with lasting shifts toward health and fitness, matches the non-numerical standards significant for growth investing, like aiming at a big, growing market and keeping a modern brand advantage.
Locating Comparable Prospects
ON HOLDING AG demonstrates the kind of prospect a joined fundamental and technical search tries to find: a firm with clear, good-quality business growth displaying signs of a positive technical position. Investors wanting to examine other stocks that fit similar standards of solid growth, sound financial health, and encouraging technical formations can use the preset search: 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. The information presented is based on data provided and should not be the sole basis for any investment decision. Investing involves risk, including the potential loss of principal. Always conduct your own research and consider consulting with a qualified financial advisor before making any investment decisions.
