For investors looking to join solid fundamental momentum with good technical entry points, a multi-factor screening method can be a useful tool. One approach is to look for stocks that show solid high-growth traits while also making positive chart patterns ready for a possible breakout. This method tries to find companies where improving business fundamentals are meeting a technical picture that gives a clear risk-reward scenario. The aim is to locate securities that are not only expanding quickly but are also at a stage where the price movement indicates a likely extension of their upward move.
Construction Partners Inc. (NASDAQ:ROAD) is a civil infrastructure company focused on the construction and maintenance of roadways and highways, mainly in the southeastern United States. A recent search for stocks with a High Growth Momentum (HGM) Rating above 4, a Technical Rating above 7, and a Setup Rating above 7 showed ROAD as a candidate for more review.
High Growth Momentum Fundamentals
The ChartMill High Growth Momentum Rating combines a number of important growth and momentum measures into one score. For ROAD, this rating is at a good 7 out of 10, pointing to solid core business momentum. This score is backed by notable fundamental data:
- Strong Earnings Growth: The company's earnings per share (EPS) grew 65.9% over the past twelve months. More importantly, recent quarterly growth has been very high, with EPS jumping 89.3% year-over-year in the latest quarter. The quarter before that saw growth of 37.3%, and two quarters ago, EPS rose by 500% compared to the prior year.
- Solid Revenue Increase: Top-line growth is also notable. Revenue went up by 54.2% over the past year. Recent quarterly sales growth has been steadily good, reported at 67.2%, 50.5%, and 53.9% over the last three reported quarters, in order.
- Positive Surprises and Revisions: ROAD has exceeded EPS estimates in two of the last four quarters, with an average surprise of 61.8%. Also, analysts have raised their revenue estimates for the next year by almost 9% over the last three months, showing increasing belief in the company's sales path.
- Margin Improvement: The profit margin in the most recent quarter was 6.29%, a clear improvement from 5.65% in the prior quarter and 0.74% two quarters ago. This pattern of improving profitability is a vital part of lasting high growth.
These factors, strong and speeding growth, positive earnings surprises, and upward analyst revisions, are exactly what the HGM rating aims to find, indicating a company with solid short-term business momentum.
Technical Strength and Setup Quality
While good fundamentals give the "why," technical analysis helps find the "when." According to the detailed ChartMill Technical Report, ROAD gets a Technical Rating of 7 and a very good Setup Rating of 9.
The Technical Rating of 7 shows a stock that has been a market leader, doing better than 80% of all stocks over the past year. The price movement displays a steady pattern of increasing prices, and the stock is now trading near the top of its one-month range, showing core strength.
The key metric is the Setup Rating of 9. This high score implies the stock is making a positive consolidation pattern. The report states that prices have been trading in a set range, making a clear resistance level just above the current price at $117.57 and a support area below near $113.17. This kind of tight consolidation after a rise, often called a "base," can come before a new move higher. The report also points out a recent "Pocket Pivot" signal, a volume-based measure that implies buying by institutional investors, adding more support to the positive setup.
Meeting of Growth and Technicals
The attraction of ROAD for a momentum-focused investor is in this meeting. The company is showing very high fundamental momentum through rising earnings and sales growth. At the same time, its chart is not showing a stretched, parabolic rise but instead a controlled pause or consolidation. This pairing is important: the high growth measures supply the energy for a possible move, while the high-quality technical setup gives a possible entry point with a set level of risk (a stop loss below support).
This fits well with the screening method. The HGM Rating makes sure we are reviewing companies with solid business acceleration. The Technical Rating sorts for those in clear uptrends. Lastly, the high Setup Rating finds which of those strong stocks are now "reloading" or basing, possibly giving a lower-risk entry before a new breakout.
Finding Like Opportunities
Searches that join fundamental momentum with technical timing can effectively show ideas like Construction Partners Inc. For investors wanting to examine other stocks that now match similar standards of good growth, solid trends, and actionable setups, the search used for this review is open for more study.
Find more high-growth momentum stocks with breakout setups by seeing the live search results here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. The analysis is based on data provided and should not be the sole basis for an investment decision. All investing involves risk, including the potential loss of principal. Always conduct your own due diligence and consider consulting with a qualified financial advisor before making any investment decisions.
