A method for stock selection often joins strict technical rules with an emphasis on fundamental growth. The plan used by well-known trader Mark Minervini shows this, using a defined Trend Template to find stocks in strong uptrends while also requiring good and speeding earnings and sales growth. This two-step process tries to locate market leaders early in their large price increases, where the technical condition supports the fundamental account. By using this approach with a stock screener, investors can methodically find candidates that display both the price movement of a leader and the financial strength of a growing company.
TOYO CO LTD (NASDAQ:TOYO), a Japanese designer and maker of solar cells and modules, recently came from a screen made to locate stocks matching this joined outline. The screen first uses Minervini's Trend Template to make sure a stock is in a confirmed, long-term uptrend, then adds a High Growth Momentum (HGM) rating to select for outstanding fundamental expansion. TOYO's present chart and financial numbers suggest it deserves more examination under this structure.
Checking the Trend Template Fit
Mark Minervini's Trend Template is a group of fixed technical rules made to select for stocks in a clear Stage 2 uptrend. The idea is clear: trade in the direction of the strongest movement. For TOYO, a check of the main rules shows a strong technical view:
- Moving Average Arrangement: The stock's present price ($9.30) sits well above its rising 50-day ($8.15), 150-day ($7.01), and 200-day ($6.32) simple moving averages (SMAs). Importantly, the 50-day SMA is above the 150-day SMA, which is above the 200-day SMA, creating the "stacked" order that shows increasing bullish movement across different periods.
- Nearness to Highs: A central part of the Minervini plan is to concentrate on strength, not low price. TOYO's price is now within 10% of its 52-week high of $10.21, meeting the "within 25% of the high" rule. At the same time, at 262% above its 52-week low of $2.57, it greatly passes the need to be at least 30% above the low, showing a strong recovery and trend shift.
- Better Relative Strength (RS): Maybe most significant is TOYO's RS rating of 97.49. This means the stock has done better than nearly 98% of the market over the last year. Minervini states that real market leaders have high RS scores, often above 80 or 90, as they are the first to gain institutional money during market rises.
This combination of points draws a chart of a stock in a strong uptrend with good institutional backing, exactly the kind of situation the Trend Template is made to find.
Checking High-Growth Fundamentals
While the Trend Template makes sure the stock is technically good, the High Growth Momentum filter looks for the fundamental force pushing that price action. Minervini's study shows that the largest stock market winners are almost always backed by fast growth in earnings and sales. TOYO's recent financial results show it has this kind of driving force.
- Fast Earnings Growth: The company's trailing twelve-month (TTM) EPS is at $1.58, showing a large year-over-year growth of 290%. Even more notable is the newest quarterly result, with EPS growing 408% compared to the same quarter last year. This kind of speed increase is a main sign of fundamental movement.
- Quick Revenue Growth: Growth is not only on the bottom line. TOYO's TTM revenue has jumped over 405% year-over-year, with last quarter's sales up 184%. This top-line increase confirms solid demand for its solar goods and services.
- Good Profitability: Even with its fast growth period, the company keeps steady profitability. The profit margin in the last reported quarter was a solid 18.95%, showing the business can turn sales into earnings well.
These numbers show why the stock has a high HGM rating. The joining of triple-digit percentage growth in both earnings and sales gives the fundamental "catalyst" that Minervini names as a key part for strong performance, giving reason and weight to the strong price trend.
Technical Condition and Present Situation
According to ChartMill's own analysis, TOYO gets a perfect Technical Rating of 10 out of 10, putting it in the top group of all stocks from a trend condition point of view. The report says the long-term trend is positive and the stock has done better than 97% of the market over the last year. Its relative strength inside the Semiconductors & Semiconductor Equipment industry is also good, doing better than 89% of its peers.
However, the analysis also gives a word of warning for immediate entry. The Setup Quality rating is a medium 3, showing that while the trend is very good, the stock may not be at a perfect low-risk entry point after its recent rise. The report indicates the price change has been unstable and that waiting for a time of settling could give a better risk/reward situation. Key support levels are found between $8.15-$8.18 and $7.83-$7.94, which could become areas of interest on any decline within the continuing uptrend.
Summary
TOYO CO LTD shows a strong example of a stock that now fits with the ideas of a joined movement and growth plan. It meets the strict technical needs of the Minervini Trend Template, trading in a good uptrend with better relative strength. Fundamentally, it shows the kind of fast, speeding growth in earnings and sales that growth investors look for and that often supports continued price gains. While the present technical situation suggests waiting for a more favorable entry, the basic trends in both price and business results make TOYO a stock deserving of a place on a watchlist for investors following this method.
Interested in locating similar candidates? You can run the "High Growth Momentum + Trend Template" screen yourself to find other stocks that meet these joined rules. Click here to access the screen and see the present results.
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Disclaimer: This article is for information and learning only. It is not meant as investment advice, nor does it form a suggestion to buy, sell, or hold any security. The analysis is based on given data and certain methods, but past results are not a guide for future results. Always do your own research and think about talking with a qualified financial advisor before making any investment choices.