Douglas Dynamics Inc (NYSE:PLOW) Fits the Minervini Growth-and-Trend Model

Identifying promising growth stocks often involves a dual approach: examining both the business momentum and the technical price trend. One systematic method that joins these parts is the strategy made popular by trader Mark Minervini. His method focuses on finding companies with improving fundamental performance, strong and getting better earnings and sales growth, while also making sure the stock is in a clear, solid uptrend using a specific group of technical filters called the Trend Template. This structure helps investors concentrate on market leaders early in their large price advances, balancing growth possibility with controlled trend-following.

Douglas Dynamics Inc (NYSE:PLOW) recently appeared on a scan made to find stocks that fit this growth-and-trend idea. The scan uses Minervini's Trend Template to filter for technically sound charts and adds a "High Growth Momentum" (HGM) rating to find companies with notable fundamental momentum. PLOW seems to fit the requirements on both sides, offering a case for more review by growth-focused investors.

Fitting the Minervini Trend Template

The center of Minervini's stock selection process is his Trend Template, a fixed group of technical conditions made to find stocks in a solid Stage 2 uptrend. The template makes sure an investor is only looking at equities where the trend is clearly set across multiple time periods, which helps avoid buying declining or slow stocks. For PLOW, the present technical view fits with several important template points:

• Price Above Key Moving Averages: The stock's last price of $31.97 trades above its 50-day ($31.02), 150-day ($30.16), and 200-day ($28.72) simple moving averages (SMAs). This order shows positive momentum across short, medium, and long-term views.
• Trending Long-Term Averages: The 200-day SMA is moving up, having changed from a past value of $28.69 to its present $28.72. An increasing long-term average supports the continuation of the uptrend.
• Moving Average Order: The 50-day SMA is positioned above the 150-day SMA, which is above the 200-day SMA. This ordered, positive arrangement is a standard sign of a solid trending stock.
• Nearness to Highs: PLOW's price is within 25% of its 52-week high of $34.25, a level Minervini uses to focus on market leaders showing force rather than low-priced opportunities. Stocks close to their highs frequently have the momentum to keep rising.
• Solid Relative Strength: With a ChartMill Relative Strength (CRS) score of 76.79, PLOW is doing better than more than three-quarters of all stocks. High relative strength is important, as it shows the stock is a leader and gaining investment even during wider market activity.

These technical parts together indicate PLOW is in a good uptrend, meeting the controlled "when to buy" part of the growth investing plan by confirming the market's positive view of its price movement.

Reviewing High Growth Momentum Fundamentals

While the Trend Template covers the "when," Minervini's method strongly focuses on the "why" through fundamental review. The scan's HGM rating judges a company's growth path, and PLOW's recent financial numbers show clear improvement, especially in profitability.

• Large Earnings Growth: The most recent quarterly earnings per share (EPS) jumped 66.7% compared to the same quarter last year. This comes after a large 131% growth in the quarter before. On a trailing twelve-month (TTM) basis, EPS has grown 61.6%.
• Positive Earnings Surprises: The company has exceeded analyst EPS predictions in three of the last four quarters, with an average beat of over 72%. Steady positive surprises can lead to higher revisions and new investor attention.
• Getting Better Analyst Sentiment: Analysts have raised their earnings predictions for the next fiscal year by 2.46% over the past three months. Increasing predictions often come before more price growth as the market adapts to better expectations.
• Solid Annual Growth: Looking at full fiscal years, PLOW's EPS grew 45% in its last reported year, a sharp recovery from a -45% drop the year before, showing a strong operational recovery is happening.

This fundamental view is key. Minervini's study shows that the largest stock market winners are nearly always backed by solid, improving earnings growth before their major price increases. PLOW's recent profitability jump supplies the fundamental driver that could support its technical uptrend.

Technical Condition and Setup Points

Beyond the fixed Trend Template, a wider technical review gives setting. According to ChartMill's automated technical report, PLOW gets a good technical rating of 7 out of 10. The report states the long and short-term trends are both positive, and the stock is doing better than 80% of its peers in the Machinery industry. Important support levels are found between $31.00 and $31.27, coming from a combination of moving averages and trendlines, giving a possible area for the stock to find buyers during dips.

However, the report also gives a point of care for immediate entry: the present Setup Quality rating is low (3 out of 10). This implies the stock's price movement has been a bit changeable recently, missing the steady, low-change consolidation, like a Minervini Volatility Contraction Pattern (VCP), that frequently comes before a high-chance breakout. For traders following the method closely, this shows a need for waiting, looking for a more clear formation to appear before starting a full position.

Conclusion

Douglas Dynamics (PLOW) offers an interesting case where sound fundamental momentum and a confirmed technical uptrend meet. The stock fits the controlled requirements of the Minervini Trend Template, trading in a clear uptrend above rising moving averages with solid relative performance. Fundamentally, its large recent earnings growth and positive estimate revisions meet the high-growth momentum scan, supplying a fundamental reason for the price trend.

While the overall technical condition is rated well, the absence of an immediate high-grade setup suggests investors could think about putting PLOW on a watchlist. The best situation for a precise entry would be for the stock to settle its recent gains, forming a steadier pattern with less change, which would then offer a more clear risk/reward setup.

Interested in finding more stocks that fit this growth-and-trend model? You can run the same "High Growth Momentum + Trend Template" scan yourself to find other possible choices. Click here to access the scan and see present results.

Disclaimer: This article is for informational and educational purposes only. It is not intended as investment advice, a recommendation, or an offer to buy or sell any security. The analysis is based on data provided and certain screening methodologies; past performance is not indicative of future results. Always conduct your own due diligence and consider consulting with a qualified financial advisor before making any investment decisions.