In the search for stocks with strong potential, many investors use organized methods that join detailed chart study with basic measures of expansion. One such effective method is supported by well-known trader Mark Minervini. His system, often summarized in the "Trend Template," centers on finding stocks already in clear upward moves, making sure an investor is moving with the market's current direction. This is combined with a basic filter for notable expansion momentum, looking for firms showing increasing profits and revenue. This two-part method tries to identify leading companies early in their expansion phases while they are also positioned on charts for more progress.
StepStone Group Inc-Class A (NASDAQ:STEP) appears as a present example that fits this joined chart and expansion-centered view. As a private markets investment firm, StepStone offers access to the large area of private equity, infrastructure, debt, and real estate through fund commitments, secondaries, and co-investments.
Fitting the Minervini Trend Template
The foundation of the first filter is the Minervini Trend Template, a group of firm chart conditions made to sort for stocks in a clear, definite upward move. The template stresses price level compared to important moving averages, trend path, and nearness to peaks, all to steer clear of low-priced stocks and select strong ones. An examination of STEP's chart and technical numbers shows a notable fit with these conditions:
- Price Above Key Averages: The stock's last price of $73.07 trades well above its rising 50-day ($65.93), 150-day ($62.82), and 200-day ($60.57) simple moving averages (SMAs). This meets the template's need for the price to be above all three averages, showing continued buying interest across short, medium, and long-term periods.
- Upward-Moving Averages: The 200-day SMA has moved from 60.42 to 60.57, confirming a rising long-term trend. Also, the 50-day SMA sits above both the 150-day and 200-day SMAs, forming the positive order of shorter-term momentum guiding longer-term trends, a known mark of a sound Stage 2 rise.
- Nearness to Highs: A main Minervini idea is to concentrate on strength, not low prices. STEP's price is within 6% of its 52-week peak of $77.80, well inside the template's "within 25%" condition. At the same time, at over 82% above its 52-week low, it clearly shows major recovery and momentum, well past the 30% minimum.
- Strong Relative Performance: With a ChartMill Relative Strength (CRS) score of 76.66, STEP does better than more than three-quarters of all stocks. More significantly, it does better than 80% of similar companies in the Capital Markets industry, marking it as an industry leader, a trait valued in the Minervini system.
Showing Notable Expansion Momentum
Meeting the chart filter is only part of the process. For a stock to have lasting upward possibility, it must be supported by sound and improving business basics. The "High Growth Momentum" part of the filter looks for companies where profit and sales expansion is not only good, but getting better. STEP's recent financial numbers show several positive signals:
- Strong Profit Growth: The company's Trailing Twelve Month (TTM) EPS is $2.06, showing a year-over-year increase of 26.4%. Viewing quarterly results, the latest quarter saw EPS grow 20% compared to the same quarter last year. Possibly more indicative, analyst view is improving; the average forecast for next year's EPS has been raised by 5.8% over the past three months.
- Major Revenue Growth: Top-line expansion is especially clear. TTM revenue has jumped 91.1% year-over-year. The last reported quarter showed sales growth of 22.7%, and forecasts for the next quarter predict a notable 111.1% rise. This level of revenue increase is a main force that can draw large investment and push further price gains.
- Positive Profit Surprises: The company has exceeded EPS forecasts in two of the past four quarters, with an average beat of 11.8%. This record of surpassing predictions builds trust with the market and can signal future positive forecast changes.
Chart Condition and Formation Evaluation
Beyond the fixed Trend Template conditions, STEP's overall chart condition is scored well. ChartMill's own Technical Rating for the stock is a solid 8 out of 10, backed by positive short-term and long-term trends. The technical note states the stock is currently showing a bull flag formation, a pause inside an upward move that often comes before a continued rise. This matches a fair Setup Rating of 6, indicating a possible entry point may be developing after recent increases.
The study finds several support areas below the present price, with the most important group between $65.07 and $67.43, giving a defined zone for setting risk. With very little direct resistance noted above, the way for a possible breakout seems clear. For a full look at the support levels, trend strengths, and a sample trade idea, you can see the complete ChartMill Technical Analysis Report for STEP.
An Example for More Study
StepStone Group makes a notable example for investors using an expansion-and-trend view. It successfully meets the strict conditions of the Minervini Trend Template, confirming its place in a continued market rise as an industry leader. In its basics, it shows the kind of increasing revenue and profit growth, along with positive analyst changes, that can support the next part of a momentum move. The present chart position indicates a pause inside this upward move, which may present a planned chance.
Interested in finding other stocks that presently meet this mix of notable-expansion basics and sound chart trends? You can view the live filter results using this High Growth Momentum + Trend Template Screener.
Disclaimer: This article is for information and learning only. It is not meant as investment guidance, a suggestion, or an offer to buy or sell any security. The study is based on data and methods thought to be dependable, but its correctness cannot be assured. Investing in stocks includes risk, including the possible loss of capital. Always do your own complete study and think about your personal money situation and risk comfort before making any investment choice.
