Shoals Technologies Group - Class A (NASDAQ:SHLS) Fits the Minervini Trend Template for High-Growth Momentum

The Mark Minervini Trend Template is a methodical process built to find stocks showing powerful uptrends, mixing defined technical measures with fundamental growth traits. This approach concentrates on securities that are in a verified stage 2 uptrend and also display speeding up business momentum, with the goal of catching leaders early in their price increase cycle. The plan stresses purchasing strength instead of weakness, employing moving average arrangements, relative performance, and nearness to new highs as primary technical screens, while also looking for companies presenting solid earnings and sales growth.

Shoals Technologies Group - Class A (NASDAQ:SHLS) appears as a candidate that fits this ordered growth and momentum method. The company, a supplier of electrical balance of system solutions for solar energy projects, functions in an area set for long-term increase, which can offer a fundamental support for high-growth investors.

Technical Fit with the Trend Template

A central principle of the Minervini plan is to only put money in stocks showing definite technical strength, which is measured by the Trend Template's eight conditions. Shoals Technologies presently meets these requirements, indicating a stock in a strong uptrend.

• Moving Average Arrangement: The stock's price is located above all main moving averages (50-day, 150-day, and 200-day), and these averages are arranged in a positive order, the 50-day above the 150-day, and the 150-day above the 200-day. This formation verifies that buyers are in command across several timeframes.
  • Current Price: $8.93
  • 50-day SMA: $8.67 (increasing)
  • 150-day SMA: $6.22 (increasing)
  • 200-day SMA: $5.59 (increasing)
• Nearness to Highs: The stock is trading more than 30% above its 52-week low of $2.71 and is within 25% of its 52-week high of $11.36. This shows strong momentum and an absence of overhead supply, a main point Minervini points out for steering clear of stocks weighed down by sellers from prior peaks.
• Better Relative Performance: With a ChartMill Relative Strength (CRS) rating of 95.75, SHLS is doing better than 95% of all stocks in the market. High relative performance is a foundation of the plan, as it finds market leaders that usually lead in bull markets and fall less in downturns.

This technical setup is important because it methodically sifts out stocks in consolidating or falling formations, requiring the investor to concentrate only on those with a demonstrated and continuing history of price increase.

Fundamentals for High Growth Momentum

Beyond the price chart, the Minervini plan looks for companies with solid and speeding up fundamental results. Shoals Technologies shows several measures that interest high-growth investors, especially in its recent operational recovery.

• Earnings Speed-Up: The latest quarterly EPS increased by 50% compared to the same quarter last year. Also, analysts have notably increased their projections for the next quarter, forecasting 79% growth, and for the next full year, with upward changes of almost 10% over the last three months. This pattern of positive earnings surprises and increasing expectations is a strong catalyst that Minervini notes as a forerunner to large price movements.
• Solid Sales Growth: Revenue growth has sped up again, with the last quarter displaying a 33% year-over-year rise. Projections for the next quarter indicate an additional 38% growth. This return to strong top-line increase is necessary for maintaining high valuations and investor attention.
• Profitability: The company sustains profitability, with a positive EPS (TTM) of $0.33. While yearly numbers have been changeable, the bettering quarterly profit margin—from 7.3% three quarters ago to 8.7% in the most recent quarter—hints at a positive direction in operational effectiveness.

These fundamental gains are critical because, as Minervini states, "big earnings attract big attention." Stocks with speeding up growth and positive estimate changes often draw institutional buying, which can support continued price gains.

Technical Condition and Setup Summary

According to the detailed technical report, SHLS gets a solid 8 out of 10, mirroring its good technical condition. The long-term trend is graded as positive, and the stock performs better than a large majority of the market and its industry counterparts. The report mentions key support levels between $8.92 and $5.48, giving clear zones for risk management, while resistance is seen close to the $9.40 to $10.85 area. While the short-term trend is currently neutral and the stock is trading in the lower section of its recent one-month span, the overall technical view stays positive for a possible restart of the uptrend.

Finding Similar Opportunities

For investors looking for other stocks that match this strict mix of technical strength and high-growth momentum, the predefined screen used to find SHLS is accessible for more study. You can find more potential candidates by checking the 'High Growth Momentum + Trend Template' screen on ChartMill.

Disclaimer: This is not investment advice. The content is intended for informational and educational purposes only. It is crucial to conduct your own research and consider your individual financial situation and risk tolerance before making any investment decisions. Please read our full disclaimer and terms of use to understand our obligations.