The choice of TKO Group Holdings Inc (NYSE:TKO) comes from a systematic screening process made to find stocks that fit two different but complementary investment approaches. The screen first uses the strict technical standards of Mark Minervini's Trend Template, a method centered on finding equities in solid, confirmed uptrends. It then adds a fundamental filter for High Growth Momentum (HGM), looking for companies with quickening earnings and sales growth. This two-part method tries to locate securities that are both technically sound and fundamentally set for growth, a pairing frequently desired by investors focused on growth.
A Sound Technical Base: The Minervini Trend Template
Mark Minervini's strategy is based on the concept that the largest stock market successes are already in a Stage 2 climb before their largest price jumps. The Trend Template gives a clear, rules-based structure to find these candidates by making sure they line up across different time periods and show strength compared to the wider market.
A look at TKO's chart and important measures shows it fits the main technical standards of this template:
- Trend Agreement: The stock is priced above all its main moving averages (50-day, 150-day, and 200-day), a key need. Importantly, these averages are in the right bullish order: the 50-day SMA ($206.84) is above both the 150-day ($193.53) and 200-day ($187.07), and the 150-day is above the 200-day. This layered arrangement points to continued buying interest across short, medium, and long-term periods.
- Nearness to Highs: TKO's present price is within 4% of its 52-week high of $218.11, well inside the template's need of being within 25% of the high. At the same time, the stock is about 59% above its 52-week low, much more than the 30% minimum. This shows solid rebound force and a tendency to lead, not follow.
- Better Relative Strength: With a ChartMill Relative Strength (CRS) score of 81.6, TKO does better than over 81% of all stocks in the market during the last year. More significantly, it does better than 86% of its peers in the Entertainment business. Minervini stresses that real market leaders show high relative strength, as institutional money moves into the top performers first.
This technical view is supported by the stock's "Positive" short and long-term trend grades from ChartMill and a full Technical Rating of 10/10, showing very good health across studied measures.
The Growth Driver: High Growth Momentum Fundamentals
While a good chart is necessary, Minervini's complete strategy, known as SEPA (Specific Entry Point Analysis), includes fundamental study to know the reason a stock is moving. The High Growth Momentum filter used in this screen looks for companies displaying signs of quickening business results, which often works as the trigger for a continued price trend.
A study of TKO's recent financials shows several strong growth points:
- Rapid Sales Growth: The company's latest quarterly revenue jumped 64.4% year-over-year. This comes after a full fiscal year where revenue increased by a notable 67.4%. Such fast speed in sales is a typical sign of companies starting a high-growth period and can draw major investor notice.
- Earnings Movement: Even with a drop in trailing twelve-month (TTM) earnings per share, the most recent quarter displays a strong recovery, with EPS increasing 67.9% compared to the same quarter last year. This positive turn is important, indicating the company is turning its solid revenue growth into net profitability.
- Cash Flow Creation: Maybe one of the most notable numbers is the 240% year-over-year growth in free cash flow per share (TTM). Solid and increasing cash flow gives a company the financial ability to put money back into growth, reduce debt, or give capital to shareholders, supporting the durability of its growth.
- Analyst Outlooks: While next-year EPS forecasts have had negative changes, a detail for investors to watch, revenue forecasts for the next year have been adjusted upward by 0.57% over the last three months. This implies analysts expect continued sales strength ahead.
Technical Position and Risk Points
Beyond the basic scores, ChartMill's technical report gives a detailed view of the present trading position. TKO gets a Setup Rating of 8, meaning it is coming out of a time of sideways movement with lower volatility, a good sign before a possible new upward move. The report notes a clear resistance area just above the present price, around $217.45-$217.99, and a support area below near $209.57.
For a trader using Minervini's methods, a sensible plan could involve an entry on a clear move above the $218 resistance level, with a protective stop-loss order set below the noted support. This establishes a clear, quantifiable risk limit, which is a key part of careful trading. The present market condition, with a good short-term trend for the S&P 500, gives a helpful setting for such breakout tries.
Locating Comparable Chances
TKO GROUP HOLDINGS INC offers an example of a stock that presently fits both momentum-based technical rules and fundamental growth screens. Investors wanting to find other securities that pass this two-part filter of the Minervini Trend Template and High Growth Momentum can check the preset screen directly: View the 'High Growth Momentum + Trend Template' Screen.
Disclaimer: This study is for information and learning only. It is not a suggestion to buy, sell, or hold any security. The given technical position and screen results are made automatically and should not be seen as investment advice. Always do your own complete research, think about your personal risk tolerance and financial position, and talk with a qualified financial advisor before making any investment choices. Past results are not a guide to future results.
