For investors looking to join solid fundamental growth with positive technical patterns, a plan that joins the ChartMill High Growth Momentum Rating with Technical and Setup Quality scores can be an effective method. This process seeks to find companies showing very strong earnings and sales momentum—important parts for high-growth plans like CANSLIM—while also displaying a promising chart pattern that indicates a possible entry point. The aim is to locate stocks where strong business momentum meets a technical situation ready for an advance.
TransMedics Group Inc (NASDAQ:TMDX) appears as a notable candidate from such a search, earning a 7 on the High Growth Momentum Rating, a full 10 on the Technical Rating, and a 7 on the Setup Quality Rating. This mix indicates a company in a strong uptrend, supported by solid financial improvement, which is now pausing its gains and could be setting up for its next move up.
Fundamental Growth Momentum
The heart of the high-growth momentum method is finding companies with improving business fundamentals. TransMedics shows this clearly across several important measures, which contribute directly to its high HGM Rating.
- Outstanding Earnings Growth: The company's earnings per share (EPS) growth is rising sharply. Year-over-year EPS growth for the trailing twelve months is at a notable 163%. More importantly, the latest quarter saw EPS jump 450% compared to the same time last year, a clear sign of strong recent momentum.
- Solid and Steady Sales Growth: Revenue growth remains firm, with TTM sales up more than 41%. Recent quarterly sales growth has regularly been over 30%, showing continued demand for the company's Organ Care System technology and services.
- Positive Surprises and Revisions: TransMedics has a complete record of exceeding EPS estimates over the past four quarters, with an average surprise of 92%. Also, analysts have raised their earnings estimates for the next year by more than 10% in the last three months, showing increased belief in the company's short-term outlook.
- Growing Profitability: The company's move to profitability is speeding up. Its profit margin in the last reported quarter was 16.9%, a major gain from 5.6% just three quarters before. This growth in margins is a key part of lasting high growth, showing operational leverage and efficiency improvements.
These elements together describe a company going through a fundamental turning point, which is exactly what the High Growth Momentum Rating is made to find.
Technical Strength and Trend
While solid fundamentals give the "why" for investment, technical analysis aids with the "when." According to the detailed ChartMill Technical Report, TransMedics shows excellent technical condition, receiving a top rating of 10.
- Strong Relative Strength: The stock is doing better than 93% of the whole market and 94% of its peers in the Health Care Equipment & Supplies industry over the last year. This leading position is a trait of stocks in a continued uptrend.
- Clear Uptrend Across Timeframes: The long-term trend is rated as positive, and the stock is trading above all its main moving averages (20, 50, 100, and 200-day), confirming the bullish structure.
- Pause Within a Trend: Despite the clear uptrend, the short-term trend is currently neutral. This shows the stock is taking a break or pausing its large gains, which is a normal and good part of a continued rise.
Setup Quality and Possible Trade Dynamics
The current pause is what gives TMDX its good Setup Rating of 7. The technical report states that prices have been moving in a range between about $120 and $152 over the last month, with the current price located in the middle. This time of tight trading after a strong rise can create a base for the next advance.
The analysis finds a defined resistance area between $141.52 and $142.31. A clear move above this area could signal the restart of the main uptrend and act as a possible entry signal for momentum investors. The report also mentions the recent appearance of a "Pocket Pivot" signal, a volume-based pattern often linked with institutional buying during a pause, adding another piece of positive technical information.
Conclusion
TransMedics Group shows a situation where solid fundamental momentum and good technicals meet. Its very strong earnings growth, growing margins, and steady estimate beats meet the main needs for high-growth momentum investing. Technically, the stock is a market leader in a defined uptrend that is now experiencing a positive pause, offering a specific level for possible entry.
For investors using this joined plan, TMDX shows the kind of opportunity searches are made to find: a fundamentally strong company appearing at a technically interesting time.
Find More Possible Setups This review of TransMedics was found using a specific search for high-growth momentum stocks with good technical setups. You can run this search yourself to find similar opportunities by visiting the High Growth Momentum Breakout Setups page on ChartMill.
Disclaimer: This article is for information only and does not form investment advice, a suggestion, or an offer to buy or sell any securities. The review is based on given data and involves natural risks. Investors should do their own research and think about their financial position, risk tolerance, and investment goals before making any investment choices. Past performance does not show future results.
