The method used to find possible investment choices joins a strict technical structure with attention to fundamental growth speed. This method is based on the ideas of Mark Minervini's SEPA (Specific Entry Point Analysis) plan, which aims to locate stocks showing solid, confirmed upward movements along with speeding business foundations. The technical base comes from the Minervini Trend Template, a list made to sort for stocks in a definite Stage 2 rise. This is combined with a filter for High Growth Momentum (HGM), which assesses a company's recent profit and sales path, changes in analyst forecasts, and profit margin growth. The aim is to separate firms that are both technically healthy and showing the operational quality that often supports continued price gains.
CIA SANEAMENTO BASICO DE-ADR (NYSE:SBS), or Sabesp, is a Brazilian water and sewage utility serving the state of São Paulo. While utilities are not usually linked with high growth, a close examination shows that SBS now displays a picture that fits the joined technical and growth-centered filtering rules.
Technical Fit with the Minervini Trend Template
A central idea of the Minervini plan is to buy in the direction of the main trend, staying away from the problems of trying to buy a declining stock. The Trend Template supports this rule by needing a particular arrangement of price and moving averages. SBS now meets these important technical requirements, showing it is in a verified Stage 2 upward movement:
- Price Above Important Averages: The stock's last price of $29.13 trades well above its increasing 50-day ($27.59), 150-day ($25.39), and 200-day ($24.17) simple moving averages (SMAs). This layered arrangement shows buyers have command over several time periods.
- Moving Average Arrangement: The nearer-term 50-day SMA is positioned above both the 150-day and 200-day SMAs, while the 150-day SMA is above the 200-day SMA. This ordered positive arrangement confirms continued upward speed.
- Nearness to Highs: At its present level, SBS is trading within 5% of its 52-week high of $30.63, fully inside the Template's rule of being within 25% of the high. This shows health and an absence of above price pressure. At the same time, the stock is about 76% above its 52-week low, satisfying the rule of being at least 30% above the low.
- Better Relative Strength: With a ChartMill Relative Strength (CRS) score of 89.91, SBS is doing better than almost 90% of all stocks. High relative strength is a key feature of market leadership in the Minervini view, showing institutional interest and better performance even with wider market changes.
Foundations and Growth Speed Examination
While the Trend Template deals with the "when," the High Growth Momentum filter tries to answer the "why" by looking at the fundamental driver behind the price change. For SBS, the growth narrative is especially visible in its newest quarterly report, although it shows a varied picture over a year.
New Quarterly Speed: The most convincing growth information comes from the latest reported quarter. SBS recorded a notable year-over-year earnings per share (EPS) growth of 110.2%. This fast growth was backed by a large 43.9% rise in revenue compared to the same quarter last year. Also, the company's profit margin for the quarter grew to 23.8%, up from 17.6% three quarters before. This mix of climbing sales, rising profits, and growing margins is a clear mark of positive operational speed that growth buyers look for.
Longer-Term View and Analyst Outlook: The yearly numbers give needed background. EPS growth on a trailing twelve-month (TTM) basis is negative at -8.2%, showing difficulties in earlier times. However, the plan often focuses on new speed as a signal of future direction. It is important that SBS has exceeded analyst EPS forecasts in each of the last four quarters, with a typical surprise of 57.9%. While analyst changes for next year's forecasts have been a little negative over the past three months, the strong pattern of beating forecasts shown in the new quarter is a key element the HGM rating includes.
Technical Condition and Setup Grade
Beyond the basic Trend Template, a wider technical review of SBS is strong. According to ChartMill's own examination, the stock gets a high Technical Rating of 9 out of 10, showing very good overall technical condition led by its solid long-term trend and better relative results within the Utilities sector.
Maybe more significant for a buyer looking for an entry, SBS also shows a Setup Rating of 8. This means the stock is now forming a pattern in a fairly narrow band after its recent rise, which can make a lower-risk entry chance. The technical report finds a clear support area between $27.29 and $28.71. A clear move above the recent band, possibly started by a continuation of its positive fundamental speed, could point to the next part of the trend.
You can review the full, detailed technical analysis for SBS here.
A Choice for More Study
Sabesp shows that growth and speed can be located in surprising industries. Its price chart shows the clean features required by trend-based plans, while its newest quarterly reports show a major fundamental speed increase. This mix makes it an interesting choice for buyers using a growth-with-trend method.
This stock was found using a set screen that joins the Minervini Trend Template with High Growth Momentum filters. If you want to look at other stocks that now satisfy this exact group of rules, you can run the "High Growth Momentum + Trend Template" screen yourself here.
Disclaimer: This article is for information and learning only. It is not a suggestion to buy or sell any security. The examination uses given information and certain filtering methods. All investing has risk, including the chance of losing the original amount. You should do your own complete study and think about talking with a qualified financial advisor before making any investment choices.