Investors looking for high-growth momentum opportunities often focus on stocks that blend strong earnings acceleration with positive technical setups. The method includes searching for companies with a High Growth Momentum (HGM) Rating above 4, signaling strong short-term earnings momentum, along with a Technical Rating above 7 and a Setup Rating above 7 to confirm a steady trend and consolidation pattern. This aligns with strategies like CANSLIM and Minervini, which highlight both fundamental growth and technical strength to spot potential market leaders.
Construction Partners Inc-A (NASDAQ:ROAD) emerges as a stock fitting these conditions.
High Growth Momentum Fundamentals
The company’s HGM Rating of 6 shows solid growth metrics, backed by:
- Strong EPS Growth: The latest quarter saw EPS jump 500% year-over-year, with the next quarter expected to rise 59.3%. Over the past year, EPS growth is 25.6%, while free cash flow has climbed 452.9%.
- Revenue Growth: Quarterly sales growth reached 53.9%, with the next quarter forecast to increase 59.7%. Full-year revenue growth is steady at 31.5%, reflecting ongoing demand.
- Positive Revisions & Surprises: Analysts have lifted next-year EPS estimates by 10.5% over the last three months, and the company has exceeded EPS estimates in three of the past four quarters by an average of 64.7%.
- Improving Profit Margins: The most recent quarter’s profit margin rose to 7.4%, up from 5.4% two quarters earlier, showing better operational efficiency.
These details match the HGM Rating’s focus on earnings momentum, growth, and upward revisions, key factors for high-growth investors.
Technical Strength & Setup Quality
ROAD’s Technical Rating of 9 points to its strong price trend, while the Setup Rating of 8 indicates a consolidation phase that could lead to another upward move. Key technical notes include:
- Long-Term Uptrend: The stock has outperformed 91% of the market over the past year, with a 68% 12-month return.
- Consolidation Near Highs: After hitting a 52-week peak of $114.74, ROAD has traded between $100 and $114.73, forming a possible base.
- Support Levels: Two key support zones exist at $101.24,$102.38 (near important moving averages) and $75.70 (a longer-term trendline), offering clear stop-loss points.
- Low Recent Volatility: The stock’s consolidation has come with reduced volatility, often a sign of a potential breakout.
The full technical report provides more details on these trends.
Why This Combination Matters
High-growth momentum strategies depend on stocks that show both accelerating fundamentals and technically sound patterns. ROAD’s mix of strong earnings growth, upward revisions, and a tight consolidation near highs makes it an interesting candidate. The stock’s technical setup hints at a possible breakout, while its fundamentals support further gains if momentum continues.
For investors seeking similar opportunities, the High Growth Momentum Breakout Setups Screen offers a selected list of stocks meeting these criteria.
Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Always conduct your own research or consult a financial advisor before making investment decisions.
