For investors looking to join solid core business progress with positive price patterns, a multi-part screening method can be useful. One process uses filters for stocks that show three important traits: a high ChartMill Technical Rating (above 7) to verify a strong uptrend, a high ChartMill Setup Rating (above 7) to find good consolidation patterns ready for a possible breakout, and a firm ChartMill High Growth Momentum Rating (above 4) to confirm the company is showing improving fundamental results. This method tries to find companies where strong earnings progress matches a technically good and well-timed entry point.
Fundamental Growth Momentum
ROKU INC (NASDAQ:ROKU) offers a strong case for growth investors, receiving a High Growth Momentum Rating of 6. This number combines several key short-term earnings and sales progress factors that are central to the CANSLIM and Minervini investment styles. The rating shows major gains in profitability and solid forward-looking projections.
- Strong Earnings Turnaround: The most notable number is the quarterly earnings growth. Compared to the same quarter last year, Roku's latest EPS jumped by 366.7%. This comes after good prior quarters of 129.2% and 45.7% growth, showing a forceful and speeding trend in bottom-line gain.
- Steady Revenue Growth: Top-line increase remains sound, with the last quarter showing almost 14% year-over-year sales growth. This steadiness is important, as lasting revenue growth provides the base for earnings speed.
- Profit Margin Improvement: A key part of the High Growth Momentum Rating is growing profit margins. Roku has shown this clearly, with its profit margin getting better from 0.95% in the prior quarter to 2.05% in the latest report. This points to better operational efficiency and pricing strength.
- Analyst Optimism: The future appears positive according to Wall Street. Analyst projections for next year's EPS have been raised by almost 69% over the past three months, a firm show of belief in the company's continuing progress. Also, Roku has a full record of exceeding EPS projections over the past four quarters, with an average beat of over 75%.
These factors, speeding EPS, stable sales growth, growing margins, and positive estimate changes, are exactly what the High Growth Momentum Rating is made to find, making Roku a clear candidate for momentum-focused plans.
Technical Strength and Setup Quality
Apart from the fundamentals, Roku's chart shows a technically sound stock set for a possible move. According to the detailed ChartMill Technical Report, the stock gets a Technical Rating of 7 and a better Setup Rating of 8.
The Technical Rating of 7 confirms the stock is in a verified uptrend. The long-term trend is rated as positive, and Roku does better than 86% of all stocks in the market over the past year. It also places well within its industry, doing better than 83% of its entertainment sector peers. The stock trades above important rising moving averages (the 50-day, 100-day, and 200-day SMAs), which is a standard sign of continued bullish momentum.
The more important score for entry timing is the Setup Rating of 8. This shows the stock is now forming a good consolidation pattern. After a strong advance, the price has been trading in a range between about $105 and $116 over the past month, letting it absorb gains and form a new base of support. The report states that a recent "Pocket Pivot" signal, a price rise on higher-than-normal volume, was seen, often a sign of institutional buying during a consolidation.
The analysis finds a clear support area around $107.54, with several other support levels stacked below. A clear breakout above the nearby resistance area near $112 could signal the return of the uptrend. This mix of a solid core trend (TA Rating 7) with a tight, clear consolidation (Setup Rating 8) creates what technical traders search for: a lower-risk, higher-probability breakout setup.
Finding Similar Opportunities
The meeting of strong earnings momentum and a technically ready chart makes Roku a clear example of what this multi-rating screen aims to find. For investors wanting to find other stocks that meet these strict standards of high growth, firm trends, and timely setups, the screening method can be copied.
You can find more possible high-growth momentum breakout setups by running the predefined screen here: High Growth Momentum Breakout Setups Screen.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The analysis is based on data provided and should not be the sole basis for an investment decision. 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.
