SABESP (NYSE:SBS) Combines High Growth Momentum with Bullish Technical Setup

For investors aiming to join the ideas of momentum and growth, a multi-layered screening method can be especially effective. One useful plan focuses on finding companies that show solid fundamental growth momentum, as seen by measures like earnings acceleration and estimate changes, while also showing sound technical health and a positive chart formation ready for a possible breakout. This technique tries to find stocks that are not only increasing quickly but are also in a good place from a price movement view, possibly giving a good risk-reward situation.

Companhia de Saneamento Basico do Estado de Sao Paulo SABESP (NYSE:SBS) offers a notable example for this joined plan. As Brazil's top water and sewage utility serving the state of São Paulo, the company works in a necessary service area, yet current information indicates it is showing traits often linked with high-growth momentum stocks.

Fundamental Growth Momentum Profile

A detailed view of SABESP's financial numbers shows the varied but finally positive signs that add to its High Growth Momentum Rating of 6. While some recent quarterly results show changes, the wider growth path and analyst feeling are positive.

• Solid Yearly Growth: The company's revenue growth over the past twelve months is at a sound 41.3%. More notably, its earnings per share for the last reported full fiscal year rose by 171.5%.
• Positive Estimate Changes: A main part of momentum investing is forward-looking analyst opinion. For SABESP, the average estimate for next year's EPS has been increased by 24.0% over the last three months, showing more positive views about future earnings.
• Earnings Surprise History: The company has exceeded EPS estimates in three of the last four quarters, with an average exceedance of 119.6%, showing a regular ability to beat market forecasts.
• Margin Improvement: Comparing yearly numbers, the company's profit margin has grown notably, from 13.8% two years ago to 26.5% in the last full year, showing better operational efficiency.

It is useful to frame these numbers. The utility area is not usually linked with very fast growth, making SABESP's recent results significant. The high growth rating recognizes this positive momentum in earnings, sales, and analyst view, even as more current quarterly EPS comparisons show drops, which is normal after a time of unusual growth. For momentum investors, the mix of strong yearly growth, improving margins, and increasing analyst estimates forms a notable fundamental background.

Technical Strength and Setup Quality

Beyond the fundamentals, SABESP's chart shows a technically healthy picture with a clear formation, as described in its technical analysis report. The stock gets a solid Technical Rating of 8 and a Setup Rating of 7.

• Long-Term Uptrend Holding: The long-term trend is clearly positive, with the stock price trading well above its important rising moving averages (50-day, 100-day, and 200-day). Over the past year, SABESP has done better than 91% of all stocks, proof of its continued momentum.
• Sector Outperformance: Within the Water Utilities industry, the stock does better than 92% of its competitors, confirming its relative strength.
• Positive Pause: Recently, the stock has started a time of pause, trading inside a set range. This stop in the earlier uptrend has let volatility fall and has created a clear support area between $24.26 and $24.88. This kind of formation is exactly what technical traders seek,a period of rest in a strong stock, which can come before the next upward move.
• Clear Risk Point: The pause gives a clear technical structure for handling risk. A possible breakout above the recent range could show a return of the uptrend, while the set support area below gives a reasonable place to set a protective stop-loss order.

The present market condition, with the S&P 500 in positive trends, gives a positive background for such breakout formations. SABESP's technical picture indicates it is not an overstretched stock but instead one that is gathering energy for its next possible move, matching its price movement with its positive fundamental momentum.

Conclusion

SABESP shows how the joining of growth momentum and technical study can find chances across market areas. The company's high growth rating is fueled by outstanding yearly profit growth, major analyst estimate changes, and a record of earnings surprises. This fundamental momentum is matched by a technically healthy chart showing a long-term uptrend and a recent pause formation that gives a clear setup for traders.

This combination tries to answer two important questions for investors: "Is the company's growth speeding up?" and "Is the stock in a good position to buy?" For SABESP, the information suggests a conditional yes to both, making it a significant candidate for plans that look for a combined effect between fundamental momentum and technical timing.

For investors wanting to find other stocks that meet these joined standards of high growth momentum and positive technical formations, more study can be done using this targeted stock screen.

Disclaimer: This article is for information and learning only. It is not investment advice, a suggestion, or an offer to buy or sell any security. The study is based on given information and should not be the only reason for any investment choice. Investing has risk, including the possible loss of principal. Always do your own research and think about talking with a qualified financial advisor before making any investment choices.