Investors aiming to benefit from major price increases often use a method that joins fundamental strength with technical timing. One such tactic is to search for solid growth stocks that are also showing encouraging technical breakout patterns. This technique tries to find companies with strong basic business momentum, shown by speeding up revenues and earnings, while also finding points when the stock's price action indicates a possible upward move is starting. By merging these two fields, investors try to place themselves in companies ready for future growth at a time when market feeling may be turning to their advantage.
TransMedics Group Inc (NASDAQ:TMDX) works in the medical technology field, focusing on portable organ perfusion systems for transplantation. Its Organ Care System (OCS) and National OCS Program are a new way to better donor organ viability and logistics.
Fundamental Growth Review
The heart of this tactic starts with finding real growth. Based on the given fundamental analysis report, TransMedics gets a solid Growth Rating of 8 out of 10. The company's recent financial results support this rating with notable momentum:
- Strong Past Growth: Revenue has increased by an average of almost 80% over recent years, with a 41.2% rise in the last year alone. Even more notable is the Earnings Per Share (EPS) growth of more than 162% in the past year, showing a fast change toward major profitability.
- Good Future Predictions: Analysts expect continued solid growth, with revenue predicted to rise by more than 21% each year and EPS estimated to grow by 33% on average in the next years.
This solid growth picture is key for the tactic, as companies growing at such speeds are the main choices for large capital gain. The growth must also be backed by a workable business base, which is checked through the company's profitability and financial health ratings, both of which are neutral for TMDX, showing no major warning signs that would go against the growth story.
Valuation and Financial Setting
While the focus is on growth, knowing the price paid for that growth is important. TransMedics' Valuation Rating is a neutral 5. The report points out a high Price-to-Earnings (P/E) ratio, which is common for high-growth companies where investors are paying for future earnings potential. However, this is partly balanced by a positive Price/Earnings-to-Growth (PEG) ratio, which indicates the stock's price may be more fair when its notable growth rate is considered. The company's financial health is acceptable, with a very strong cash position (Current Ratio of 7.69) giving room to maneuver, although it has a significant amount of debt.
Technical Position for a Possible Breakout
Finding growth is only part of the effort; timing an entry needs study of the stock's price action. The technical analysis report for TMDX shows a position that matches the tactic's second part. The stock has a good Technical Rating of 6, but more notably, it gets a high Setup Rating of 8.
The report states that prices have been moving in a band between about $127 and $146 over the past month, with lower volatility. This kind of movement often comes before a clear move. Right now, the stock is trading in the center of this band, close to several important moving averages that are moving up on longer timeframes, showing a positive basic tendency.
- Important Resistance: A clear resistance area is found just above the current price, near $138.48.
- Possible Trigger: The report notes a recent "Pocket Pivot" signal, a price increase on higher volume than any down volume day in the earlier period, which can be an early sign of institutional buying.
- Trade Position: The proposed position involves a possible breakout if the stock can clearly move above the $138.48 resistance level, with a set stop-loss point below nearby support. This framework gives a clear, rule-based plan for entry and risk control, which is a key part of technical breakout tactics.
Summary
TransMedics Group Inc offers a strong example for the joined growth-and-breakout tactic. Fundamentally, it shows the fast revenue and earnings growth that marks a solid growth stock. Technically, it is coming out of a time of movement with a set resistance level and a recent buying signal, creating the conditions for a possible bullish breakout. This meeting of strong business momentum and helpful price action is exactly what the search method tries to discover.
Interested in finding more stocks that fit this profile? You can review other possible choices by using the Strong Growth Stock Technical Setups screen.
Disclaimer: This article is for information only and does not make up investment advice, a recommendation, or an offer or request to buy or sell any securities. The study is based on data and reports given by other parties. Investing in stocks includes risk, including the possible loss of principal. You should do your own research and talk with a qualified financial advisor before making any investment decisions.
