For investors looking to join strong earnings momentum with timely technical patterns, a multi-layered screening method can be very useful. One such process uses filters for stocks showing three main traits: a high ChartMill Technical Rating (above 7) to confirm a strong uptrend, a high ChartMill Setup Rating (above 7) to find constructive consolidation patterns, and a solid ChartMill High Growth Momentum Rating (above 4) to confirm the basic fundamental growth is speeding up. This mix tries to find companies that are not only growing quickly but are also set up technically for a possible extension of their uptrend. One stock that recently came from this screen is PAN AMERICAN SILVER CORP (NYSE:PAAS).
Fundamental Growth Momentum
Pan American Silver's fundamental picture shows a company in a strong earnings upswing, which is the central need for high growth momentum plans. The company's High Growth Momentum Rating of 6 shows force across several main growth and momentum measures.
- Strong Earnings Growth: The most notable numbers are in its earnings per share (EPS) growth. Year-over-year EPS growth is at a notable 320%, while recent quarterly comparisons show large increases: 4,100% two quarters ago, 975% three quarters ago, and 49% in the latest quarter. This shows a continued time of sharp profit growth.
- Solid Sales Growth: Top-line growth is also firm, with revenue rising 21.7% over the past year. Recent quarterly sales growth has been steadily positive, reported at 42.1% last quarter.
- Positive Surprises and Revisions: The company has exceeded EPS estimates in three of the last four quarters by an average of 39.3%, showing steady outperformance. Also, analysts have been raising their estimates, with the average EPS estimate for the next year increasing by 18% over the last three months, a main sign of firming future earnings momentum.
- Cash Flow and Margin Health: Free cash flow per share has jumped by 561% over the past year, and the profit margin in the last reported quarter was a sound 19.7%, showing the company's growth is turning into real cash creation and profit.
This mix of speeding earnings, positive surprises, and upward analyst revisions is exactly what the High Growth Momentum Rating is made to find, making PAAS an interesting pick for growth-focused investors.
Technical Strength and Setup Quality
While firm fundamentals give the "why," technical analysis helps find the "when." According to the detailed ChartMill Technical Report, Pan American Silver does well here too, getting a perfect Technical Rating of 10 and a Setup Rating of 8.
The technical report points out a stock in a strong uptrend. Both the short-term and long-term trends are rated positive, and PAAS is doing better than 97% of all stocks in the market over the past year. The stock is trading well above its main moving averages (20, 50, 100, and 200-day), which are all rising, a clear sign of continued bullish momentum.
Maybe more important for entry timing, the Setup Rating of 8 shows the stock is making a constructive pattern. The report states that "prices have been consolidating lately and the volatility has been reduced," which often comes before a new directional move. A clear resistance area is noted between $55.40 and $56.12. The existence of this set resistance level, paired with reduced volatility during consolidation, makes a possible plan for a breakout setup. A clear move above this resistance could signal the next step higher, giving a set entry point with a logical support level below to handle risk.
A Merging Opportunity
Pan American Silver shows a situation where firm fundamental momentum and a bullish technical setup merge. For investors using a high-growth momentum plan, the company's strong EPS growth, positive estimate revisions, and firm cash flow creation give a solid fundamental base. The technical view supports this by showing a stock in a strong, market-leading uptrend that is now pausing in a consolidation, possibly giving a lower-risk entry point for the next possible rise.
This screen is made to find more chances like PAAS. You can find the current list of stocks meeting these rules for high growth momentum with a technical breakout setup by visiting the High Growth Momentum Breakout Setups Screen.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any securities. The information presented, including screens and ratings, is based on data believed to be reliable but is not guaranteed. All investing 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. Past performance is not indicative of future results.
