For investors looking to join solid fundamental momentum with well-timed technical entry points, a multi-factor screening method can be especially effective. One useful technique involves selecting for stocks that show high earnings and sales momentum, as measured by ChartMill's High Growth Momentum (HGM) Rating, while also showing sound technical condition and a favorable price pattern, measured by the Technical (TA) and Setup Ratings. This method tries to find companies not just in a period of speeding business performance but also in a chart situation that indicates a possible extension of their upward move, providing a combination of fundamental and technical support.
Tutor Perini Corp (NYSE:TPC) appears from such a screen, offering a case study in this joined method. The construction services firm shows the type of operational recovery and momentum that growth investors look for, while its chart indicates the stock could be getting ready for its next move up.
Fundamental Growth Momentum
The center of the High Growth Momentum method is finding companies with speeding business trends. Tutor Perini’s recent financial numbers show clear betterment across important areas assessed by the HGM Rating, which led to its score of 6.
- Earnings Speed Increase: The most notable sign of momentum is in quarterly earnings per share (EPS) growth. The company’s year-over-year EPS growth jumped to 103.6% in the newest quarter, a sharp speed increase from the 76.7% growth reported two quarters earlier and a large change from the -65.9% drop seen three quarters ago. This sequence of sharp speed increase is a main factor for momentum screens.
- Sound Sales Growth: Top-line increase supports the bottom-line betterment. Revenue growth has been solid and speeding, with the last quarter showing 30.7% year-over-year growth, up from 21.8% and 18.8% in the earlier quarters.
- Strong Cash Flow Creation: Maybe the most convincing fundamental number is free cash flow (FCF). The company’s FCF per share over the past twelve months is $9.96, showing a very large 610.6% growth compared to the prior period. This points to solid change of earnings into actual cash, a signal of financial condition and quality.
- Margin Improvement: The profit margin in the last reported quarter was 0.26%, which, while small, shows a clear step-by-step recovery from the 1.45% and 2.25% losses in the two quarters before that. This movement toward profitability is a good signal for future earnings possibility.
While the company’s EPS over the past twelve months is still negative at -$0.53, the strong quarter-over-quarter growth rates and cash flow creation point to a solid recovery underway. This is exactly the type of changing momentum story that the HGM Rating is made to find before it is widely seen.
Technical Condition and Pattern Quality
A solid fundamental story is best combined with a supportive price chart. According to ChartMill’s detailed technical report, Tutor Perini does well here also, having a perfect Technical Rating of 10 and a high Setup Rating of 8.
- Very Good Trend Condition: The technical report states that both the long-term and short-term trends are positive. The stock is trading above all its important moving averages (20, 50, 100, and 200-day), which are all moving up, a typical sign of a solid upward trend.
- Market Outperformance: TPC’s performance is not happening alone. It has done better than 98% of all stocks over the past year and 98% of its group in the Construction & Engineering industry, confirming its place as a market leader.
- Favorable Pause: After a solid rise that has seen the stock increase over 285% in the past twelve months, the price action has entered a pause phase. The high Setup Rating of 8 shows this pause is fairly tight, making a possible base. The report notes that prices have been moving back within a set range, which may "offer a good chance for an entry."
- Clear Support and Risk Control: The technical study finds several well-set support areas below the current price, the closest being from $80.97 to $81.10. This allows for exact placement of stop-loss orders, an important part for controlling risk in momentum investing.
The combination of a perfect TA Rating and a high Setup Rating suggests TPC is in an uncommon favorable spot: it is a leading stock in a solid trend that is now pausing in a steady way, possibly preparing for a new upward move.
Conclusion
Tutor Perini Corp shows the benefit of a screening method that joins fundamental momentum with technical timing. The company’s clear speed increase in quarterly EPS growth, rising free cash flow, and bettering sales trends make it a candidate for high-growth momentum investors. At the same time, its faultless technical trend and the present pause pattern, offering a set entry and exit plan, address the "when" to invest. This combination indicates the stock is being seen for its fundamental recovery while also being in a technically favorable situation for continuation.
For investors wanting to find other securities that meet these strict conditions of solid growth momentum paired with sound technical patterns, more study can be done using the High Growth Momentum Breakout Setups screen.
Disclaimer: This article is for information only and does not make up investment advice, a suggestion, or an offer to buy or sell any security. The study is based on given data and should not be the only base for an investment choice. Investors should do their own study and think about their financial situation, risk tolerance, and investment goals before trading. Past performance is not a sign of future results.
