For investors looking to combine solid earnings momentum with positive chart patterns, a multi-factor screen can be a useful tool. By selecting for stocks with strong High Growth Momentum (HGM) ratings together with high Technical and Setup Quality scores, the method works to find companies that are both seeing quickening fundamental results and are also positioned on a chart for a possible breakout. This method combines the main ideas of growth investing with planned technical entry points, looking for chances where fundamental health and price movement agree. One stock that recently appeared from this kind of screen is Solaris Energy Infrastructure (NYSE:SEI).
Fundamental Growth Momentum
Solaris Energy Infrastructure receives a High Growth Momentum Rating of 7, pointing to good short-term earnings momentum. This number combines a few important growth and momentum parts that are key to the method, as they help find companies with quickening business trends.
- Very High Quarterly Earnings Growth: The latest quarter shows year-over-year EPS growth of 325%. This comes after earlier quarter growth of 161.5%, showing strong sequential speed, a main point for momentum investors searching for growing profitability.
- Good Sales Growth: Revenue growth is also notable, with the last quarter up 122.4% year-over-year. Also, analyst confidence is seen in positive estimate changes, with the average EPS estimate for the next year moved higher by over 34% in the last three months.
- Earnings Surprises: The company has a good record of beating expectations, exceeding EPS estimates in three of the last four quarters by an average of almost 43%. Steady positive surprises can point to basic business health the market may not yet fully value.
- Margin Growth: A closer review of profitability shows a positive trend. The profit margin in the last reported quarter was 8.38%, up from 7.64% the quarter before and 4.01% two quarters ago. Growing margins indicate the company is not only increasing sales, but doing so more effectively, which can greatly improve bottom-line growth.
Technical Health and Setup Quality
While fundamental momentum is important, the technical view gives the "when" for a possible investment. Solaris does well here too, having a perfect Technical Rating of 10 and a good Setup Rating of 7, according to its detailed technical report.
- Very Good Technical Condition: A rating of 10 puts SEI with the market's technical front-runners. The report states both its short-term and long-term trends are positive, and it is doing better than 93% of all stocks over the last year. The stock is trading above all main moving averages (20, 50, 100, and 200-day), confirming a solid, multi-layered upward trend.
- Consolidation and Setup: The Setup Rating of 7 shows the stock has been settling its recent gains, trading in a set range. This makes a possible base for a new upward move. The technical analysis finds a clear resistance area near $57.01. A clear move above this point could be seen as a sign that the consolidation period is finishing and the earlier upward trend is starting again.
- Set Risk Points: The consolidation has made a support area just above $53.64. For a trader, this gives a reasonable place to set a protective stop-loss order, offering a clear and measurable risk limit, an important part of any technical breakout plan.
A Joining Chance
Solaris Energy Infrastructure shows a situation where fundamental momentum and technical condition join. The company's very high quarterly earnings growth, growing margins, and positive analyst changes meet the main needs of a high-growth momentum pick. At the same time, its very good technical trend and present consolidation pattern present a structured chart setup with clear entry and exit points. This agreement is exactly what the joined screening approach aims to find: fundamentally sound companies that are also technically set for their next possible step higher.
For investors wanting to find similar chances that meet these points of strong growth momentum paired with positive technical setups, more study can start with the High Growth Momentum Breakout Setups screen.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. The analysis is based on data provided and should not be the sole basis for an investment decision. Investors should conduct their own due diligence and consider their individual financial circumstances and risk tolerance before making any investment. Past performance is not indicative of future results.
