Roku Inc. (NASDAQ:ROKU) has emerged as a strong candidate for investors who follow a high-growth momentum strategy, combining explosive earnings acceleration with positive price action. The method we used here screens for stocks that show both strong fundamental momentum—measured by the High Growth Momentum (HGM) Rating—and a favorable technical setup, identified by a high Technical Analysis (TA) Rating and Setup Rating. The reasoning is simple: high-growth momentum investors look for companies with accelerating earnings and sales, while technical traders demand a stock that is not just rising, but also consolidating in a way that offers a favorable risk/reward entry point. Roku checks both boxes.
Fundamental Growth Momentum
At the center of the high-growth momentum strategy is the search for companies where earnings are not just growing, but accelerating. Roku’s recent financials paint a clear picture of such momentum. The company’s trailing twelve-month (TTM) earnings per share (EPS) stands at $0.57, but the growth rates are what truly stand out:
- EPS Growth (1Y TTM): 164.04%
- EPS Growth (Q2Q, last quarter): 320.83%
- EPS Growth (Q2Q, previous quarter): 366.67%
- EPS Growth (Q2Q, two quarters ago): 129.17%
- EPS Growth (Q2Q, three quarters ago): 45.71%
These figures show a clear acceleration pattern—the year-over-year comparisons have surged over the past four quarters, moving from 45% to over 320%. This is exactly the type of path that the HGM Rating rewards. The rating also considers whether a company has been surprising analysts, and Roku has exceeded EPS estimates in each of the last four quarters, with an average beat of 86.59%. Furthermore, analysts have been revising their next-year EPS estimates upward by 66.33% over the last three months, a strong sign of growing confidence.
Sales growth, while less explosive, is still solid and steady. Revenue grew 15.18% over the last TTM period, with the most recent quarter showing a 16.14% increase year-over-year. The company’s profit margin is also expanding, rising from 0.95% two quarters ago to 5.77% in the most recent quarter. This combination of accelerating earnings, positive surprises, upward revisions, and expanding margins is what earned Roku a solid HGM Rating of 6 out of 10. While a 10 is rare, a score of 6 or higher is considered strong enough to identify a stock with genuine growth momentum worth investigating further.
Technical Strength and Setup Quality
Strong fundamentals are only half the battle; a stock also needs favorable technical conditions to offer a timely entry. Roku’s technical profile is exceptional. The stock receives a perfect TA Rating of 10, indicating outstanding technical health. According to the detailed technical report available here, the positive aspects are many:
- Trend: Both the short-term and long-term trends are positive, a very bullish combination.
- Relative Strength: Roku outperformed 87% of all stocks over the past year.
- Industry Leadership: It outperforms 88% of stocks in the Entertainment industry.
- Price Action: The stock is trading near its 52-week high and is currently forming a bull flag pattern, which often precedes a continuation of the uptrend.
Beyond its technical health, the stock also presents a decent Setup Rating of 7. This score indicates that the stock is in a period of consolidation, making it possible to identify a defined entry and exit point. The recent pullback within the bull flag has created a support zone, offering a logical place for a stop-loss order. The report notes there is very little resistance above the current price, suggesting a clean path higher if the breakout materializes.
Why This Matters for the Strategy
The screening method—requiring a TA Rating above 7, a Setup Rating above 7, and an HGM Rating above 4—is designed to filter for stocks that are firing on all cylinders. A high HGM Rating ensures that the fundamental story is intact, with earnings momentum that can propel the stock higher. However, even the best companies can be overbought. This is where the technical and setup ratings become critical. A high TA Rating confirms the stock is in a strong uptrend, while a high Setup Rating means it is currently consolidating—not extended—making it a viable candidate for a new entry. Roku fits this profile perfectly.
Discover More Opportunities
This screen is designed to be repeatable. For investors seeking other stocks that combine strong growth momentum with promising technical setups, you can run the exact same scan. Click here to access the full list of stocks in our High Growth Momentum Breakout Setups Screen.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. All trading and investment decisions carry risk. You should conduct your own analysis and consult with a qualified financial advisor before making any investment decisions.