Identifying promising growth stocks often involves a dual approach: pinpointing companies with strong underlying business momentum and ensuring they are in a favorable technical position. One systematic method for this combines Mark Minervini's Trend Template, which filters for stocks in strong uptrends, with a focus on high-growth fundamentals. This strategy seeks to align explosive earnings potential with solid price action, aiming to catch leaders early in their major advances. A current stock that surfaces from such a disciplined screen is Sunrun Inc (NASDAQ:RUN), a leader in residential solar energy systems.
Meeting the Minervini Trend Template
The Minervini Trend Template is a key tool for identifying stocks in a confirmed Stage 2 uptrend, a phase where the most significant gains often occur. It uses a strict set of moving average and momentum criteria to filter out weak or basing stocks. Sunrun's current technical posture shows a clear alignment with these rules:
- Price Above Key Moving Averages: RUN's last price of $20.10 sits comfortably above its rising 50-day ($19.04), 150-day ($17.54), and 200-day ($15.42) simple moving averages. This stack of support levels is a classic hallmark of a healthy long-term uptrend.
- Moving Average Alignment: The faster 50-day SMA is above both the 150-day and 200-day SMAs, while the 150-day SMA is also above the 200-day SMA. This sequential bullish alignment indicates accelerating momentum across multiple timeframes.
- Proximity to Highs: The stock is trading within 10% of its 52-week high of $22.44 and is a substantial 274% above its 52-week low of $5.38. Minervini's philosophy emphasizes that strength begets strength, and leaders often make new highs.
- Superior Relative Strength: With a ChartMill Relative Strength (CRS) score of 95.68, RUN is outperforming nearly 96% of all stocks in the market. High relative strength is a required trait for market leaders in the Minervini system, indicating institutional accumulation and sector leadership.
This technical foundation suggests RUN is not in a random rally but is exhibiting the disciplined, strong price action characteristic of stocks positioned for further progress.
The Case for High-Growth Momentum
While the Trend Template ensures a stock is technically sound, the High Growth Momentum (HGM) rating examines the fundamental engine driving the price. For a company like Sunrun, this is about explosive earnings growth and improving operational metrics. The provided data reveals several clear growth catalysts:
- Explosive Earnings Growth: The most striking figures are in earnings per share (EPS). RUN's TTM EPS growth year-over-year is an exceptional 250.5%. Even more telling is the sequential quarterly momentum, with recent quarters showing year-over-year EPS growth of 188.1%, 150.0%, 94.5%, and 116.2%. This pattern of large, accelerating profits is exactly what high-growth investors and methodologies like Minervini's SEPA (Specific Entry Point Analysis) look for.
- Consistent Earnings Surprises: The company has beaten EPS estimates in all of the last four quarters, with an average surprise of 390.5%. This consistent outperformance builds credibility with analysts and often leads to upward revisions, another key Minervini fundamental filter. Indeed, analysts have raised their next-year EPS estimates by over 20% in the last three months.
- Strong Sales Expansion: Revenue growth remains solid, with the last quarter showing a 34.9% year-over-year increase. Analyst revenue estimates for the coming year have also been revised upward by 7.0%, reflecting optimism about continued demand.
- Path to Profitability: After a period of investment and scaling, the company's profit margin in the last reported quarter was positive at 2.3%, a significant milestone. The previous quarter showed an even stronger margin of 49.1%, indicating potential for highly profitable operations as the business model matures.
These fundamentals suggest the recent technical breakout is supported by a genuine improvement in business performance, reducing the risk that the stock's strength is only speculative.
Technical Health and Setup Summary
Beyond the specific Trend Template criteria, Sunrun's overall technical health is solid. According to ChartMill's proprietary analysis, RUN earns a high Technical Rating of 9 out of 10, confirming the stock is in a strong uptrend. Perhaps more importantly for timing an entry, it also has a Setup Quality rating of 7, indicating it is emerging from a consolidation period with reduced volatility.
The technical analysis identifies a clear support zone between $17.04 and $17.13, formed by multiple trendlines, and a near-term resistance area around $20.85. A decisive move above this resistance could signal the next leg up. You can review the full, detailed technical analysis for RUN, including specific support and resistance levels, here.
Conclusion
Sunrun Inc presents a case where a strong fundamental growth story, driven by soaring earnings, strong sales, and a shifting energy landscape, is being confirmed by the market through strong technical price action. It meets the rigorous, multi-faceted filters of both the Minervini Trend Template and a High Growth Momentum screen, suggesting it has the dual engines of business momentum and investor demand that can support sustained outperformance.
Interested in finding more stocks that combine strong trends with high-growth fundamentals? You can explore the screen that identified SUNRUN INC and discover other potential candidates by visiting the High Growth Momentum + Trend Template screen on ChartMill.
Disclaimer: This article is for informational and educational purposes only. It is not intended as investment advice, nor does it constitute a recommendation to buy, sell, or hold any security. The analysis is based on data provided and certain methodologies; past performance is not indicative of future results. Always conduct your own due diligence and consider consulting with a qualified financial advisor before making any investment decisions. Please read our full disclaimer here.