For investors aiming for major price increases, a mix of technical and fundamental analysis can be an effective plan. The aim is to find companies with the core financial soundness and growth path to maintain a long-term price rise, while also locating a time when the stock's trading activity indicates that rise is starting. This process involves searching for stocks displaying good fundamental growth, firm profitability, and sound finances, and then adding technical analysis to find those moving out of periods of sideways trading. This combination tries to locate chances where a company's positive developments are matched by market activity.
PALANTIR TECHNOLOGIES INC-A (NASDAQ:PLTR) presents a notable example of this mixed method. The data analytics and artificial intelligence software company has been a central topic in growth investing discussions, and an examination of its fundamental and technical details shows why it recently appeared in a search for good growth stocks with favorable technical formations.
A Base of Notable Fundamental Growth
The basis of this plan is finding companies with fast and lasting growth, which is a main factor for long-term share price gains. Palantir's fundamental report highlights its status as a leading growth stock.
- Fast Historical Growth: The company has shown notable expansion. Revenue increased by 47.23% over the last year, with an average yearly growth rate of 31.01% over recent years. More notably, its Earnings Per Share (EPS) rose 82.86% last year.
- Good Forward Momentum: Importantly, this growth is not forecast to decline. Analyst projections estimate average yearly revenue growth of 40.94% and EPS growth of 43.31% for the next few years. This increasing revenue forecast is a significant sign of a company effectively growing its operations.
- Profitable Expansion: Different from many fast-growth technology companies that lose money, Palantir pairs growth with sound and getting better profitability. It has a Profit Margin of 28.11% and an Operating Margin of 21.81%, doing better than most of its software industry competitors. Its Gross Margin of 80.81% shows the soundness of its software business model.
You can examine the complete details of this analysis in Palantir's fundamental report.
Financial Soundness and Valuation Setting
A good growth story must be backed by financial statements that can support continued growth and handle economic changes. Palantir receives an 8 out of 10 on ChartMill's Financial Health score, supported by excellent financial statements with no debt and very good liquidity, with Current and Quick Ratios above 6.4. This financial strength gives major operational room to maneuver.
The main point to note, typical for many fast-growth companies, is valuation. With a Price/Earnings ratio much higher than both the S&P 500 and its industry average, the stock is valued for ideal outcomes. This highlights the value of the technical formation; purchasing at a favorable time is important when valuations are high, as it helps control the chance of buying at a temporary high point.
A Technical Formation Indicating Activity Return
The fundamental story gives the "reason," while the technical analysis gives the "timing." Palantir's technical report gives a score of 7, mentioning a reasonable formation pattern after a time of sideways trading.
- Long-Term Trend Remains: Even with recent flat movement, the long-term trend stays positive. The stock has greatly outperformed both the wider market and its software industry competitors over the past year.
- Sideways Trading in an Upward Trend: After a large increase, the stock has been trading in a broad range over the last month, absorbing its gains. This sideways trading is happening in the upper part of its 52-week range, which is usually a signal of strength.
- Important Levels to Watch: The technical analysis finds a clear resistance area just above the present price (around $190.34, $190.56). A continued move above this area could indicate the finish of the sideways phase and the start of the next upward move in the existing long-term uptrend. On the other hand, a clear support area exists below (around $172.00), giving a sensible area for a stop-loss order to control risk if the upward move does not happen.
This technical situation, a good long-term trend, a time of pause, and a set resistance level to move past, creates the "breakout pattern" that the search method looks for. It indicates the stock is preparing, and a move upward would match and support its strong fundamental growth story.
Conclusion
Palantir Technologies shows the kind of chance a mixed growth-and-technical plan tries to find. The company has the key features of a leading growth stock: a large potential market in AI and data analytics, an established platform, and a move to continued profitability. With numbers, this is supported by notable revenue and earnings growth rates, high profitability margins, and strong financial statements. Technically, the stock is hesitating inside a good long-term uptrend, creating conditions for a possible new upward move that could give a planned entry point matching the fundamental activity.
This analysis is for information only and is not investment advice. You should do your own research and think about your financial position and risk comfort before making any investment choices. Past results do not guarantee future outcomes.
Interested in locating more stocks that mix good growth fundamentals with favorable technical formations? You can examine the search method more and see other possible choices by visiting the Strong Growth Stock Technical Setups screen.
