The method of joining Mark Minervini's Trend Template with a High Growth Momentum (HGM) rating is made to find companies that are in strong technical uptrends and also supported by the fundamental earnings and sales growth that usually drive such price gains. This two-step process tries to find stocks that are market leaders based on price and have the business strength that can support and drive their progress. It looks past simple chart patterns to confirm the trend has a fundamental cause, trying to locate securities where solid technical condition and strong business growth meet.
A Technical View of Strength
From a technical view, SOLAREDGE TECHNOLOGIES INC (NASDAQ:SEDG) offers a clear example of a stock fitting the strict rules of the Minervini Trend Template. This template is important because it methodically finds stocks in a confirmed Stage 2 uptrend, sorting out weaker stocks and concentrating investment on market leaders.
A check of the main metrics shows SEDG matches the template's central needs:
- Trend Alignment: The stock's last price of $51.73 trades well above its rising 50-day ($36.48), 150-day ($35.00), and 200-day ($32.18) simple moving averages (SMAs). Importantly, the 50-day SMA is above the 150-day SMA, which is above the 200-day SMA, confirming the positive alignment of short, intermediate, and long-term trends.
- Proximity to Highs: At $51.73, SEDG is trading within 3% of its 52-week high of $53.28, meeting the template's rule of being within 25% of the yearly high. This shows the stock is displaying leadership and strength, not falling behind.
- Recovery from Lows: The current price is about 370% above its 52-week low of $11.00, well beyond the 30% minimum. This shows a strong recovery and continued upward momentum.
- Superior Relative Strength: With a ChartMill Relative Strength (CRS) score of 98.4, SEDG is performing better than nearly 99% of all stocks in the market. High relative strength is a key part of the Minervini philosophy, as it finds the true leaders during market rises.
This technical setup points to institutional buying and a clear lack of major selling pressure, signs of a stock in a lasting uptrend.
The Fundamental Driver: High Growth Momentum
While the chart shows the "what," the High Growth Momentum rating helps explain the "why." SEDG's business results supply the fundamental cause that Minervini's SEPA (Specific Entry Point Analysis) method considers necessary for strong performance. The given data shows several speeding growth trends:
- Earnings Acceleration: The company has shown notable year-over-year earnings per share (EPS) growth in recent quarters, with the newest quarter jumping 96%. This comes after earlier quarters of 98%, 55%, and 40% growth, pointing to a strong and speeding earnings trend.
- Consistent Earnings Surprises: SEDG has exceeded analyst EPS estimates in each of the past four quarters, with an average beat of almost 20%. This steady overperformance often draws institutional attention and leads to higher estimates.
- Strong Sales Growth: Revenue growth is also solid, with the last quarter growing over 70% year-over-year. This top-line growth gives a firm base for the bottom-line increase.
- Cash Flow Generation: The company's free cash flow per share has grown over 116% in the past year, bettering financial condition and options.
This mix of speeding earnings on solid sales growth with steady positive surprises is exactly the kind of fundamental picture that the High Growth Momentum screen looks for. It shows a company that is not only growing, but whose growth is beating expectations, a main force for continued stock price gains.
Technical Report Summary
ChartMill's separate technical report on SEDG gives a matching, data-based evaluation. The report gives the stock a complete technical rating of 10 out of 10, noting its stable performance and leader position. It confirms the positive long and short-term trends and notes that SEDG is performing better than 93% of its peers in the Semiconductors & Semiconductor Equipment industry. The report does warn that the recent fast price move may need a time of settling before a new good entry point appears, a careful point for any momentum-based plan. For a full look at the support levels, volume study, and other technical points, you can see the full technical analysis report for SEDG.
Finding Like Chances
The meeting of a perfect Trend Template setup and high-growth fundamentals makes SEDG a strong case study for this joined screening method. Investors wanting to use this method to find other possible leaders can run the same screen. You can find more results from the 'High Growth Momentum + Trend Template' screen here.
Disclaimer: This article is for information and learning only. It is not a suggestion to buy or sell any security. The study is based on given data and past performance, which is not a sign of future results. Always do your own research and think about talking with a qualified financial advisor before making any investment choices. Please read our full disclaimer here.