Our screening process finds securities that mix good fundamental growth traits with positive technical formations. We search for stocks with a High Growth Momentum Rating above 4, pointing to good earnings and revenue momentum, along with Technical and Setup Ratings above 7, indicating both sound technical condition and chart patterns that might offer good buying opportunities. This method focuses on companies displaying both fundamental growth speed and technical breakout possibility.
High Growth Momentum Fundamentals
CIA SANEAMENTO BASICO DE-ADR (NYSE:SBS) displays positive growth traits that add to its High Growth Momentum Rating of 6. The Brazilian water utility company has shown notable earnings increase even though it works in a typically steady industry.
Important growth measures consist of:
- EPS growth of 174.44% over the last twelve months
- Revenue growth of 48.83% over the same time
- Quarterly EPS growth of 76.27% in the latest quarter compared to the same quarter last year
- Three straight quarters of positive earnings surprises with an average beat of 119.57%
The company's profit margin growth is especially significant, rising from 13.78% in the last fiscal year to 26.50% in the most recent reporting period. This margin gain, paired with large revenue growth, points to effective scaling of operations. Analyst opinion has become positive with next-year EPS estimates adjusted upward by 14.83% over the last three months, indicating increasing belief in the company's growth path.
Technical Strength Assessment
SBS shows very good technical traits, reaching a perfect Technical Rating of 10. The stock shows good relative strength, performing better than 91% of all stocks in the market over the last year and 85% of stocks in the water utilities industry. Both long-term and short-term trends continue to be positive, with the stock now trading near its 52-week high.
The technical view shows steady strength over different periods:
- Price trading above all main moving averages (20, 50, 100, and 200-day)
- Continued upward momentum with gains of 58.53% over the last twelve months
- Good performance over shorter periods: 20.11% over six months and 20.69% over three months
Setup Quality Analysis
With a Setup Rating of 7, SBS presents a positive technical formation for a possible purchase. The stock has been moving sideways in the $22.13 to $25.07 band over the last month, with lower volatility indicating possible energy for a breakout. The present price action near the top of this band suggests increasing momentum.
The technical formation gives clear risk management points:
- Resistance area between $24.74 and $25.00 marks the nearest breakout point
- Support areas at $23.27-$23.92 and $22.01-$22.27 give reasonable stop-loss zones
- A breakout above $25.01 could indicate a resumption of the upward trend
For traders evaluating this formation, the detailed technical analysis gives exact entry and exit points based on the noted support and resistance areas.
Investment Considerations
The mix of good growth fundamentals and technical formation makes SBS a notable option for momentum investors. The company's outstanding earnings growth in a typically steady utility industry is especially significant, indicating possible operational gains or market situations that benefit the business. The technical view supports the fundamental story, with the stock displaying leadership traits and a clear sideways pattern.
While the growth numbers are strong, investors should be aware of the expected drop in next quarter EPS growth and the negative free cash flow position. These elements deserve attention as they could affect the durability of the present growth path.
For investors looking for similar options, our screening process keeps finding possible candidates mixing growth momentum with technical formations. View current screening results to find other securities matching these conditions.
Disclaimer: This analysis is for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any security. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions. Past performance is not indicative of future results.
