For investors looking to find high-potential growth stocks, a combined method of strict technical and fundamental screening can be an effective tool. One such method is inspired by the work of well-known trader Mark Minervini, whose Trend Template offers a strict technical structure for finding stocks in solid, confirmed uptrends. When this is joined with a focus on high-growth momentum, examining quickening earnings, strong sales growth, and positive analyst revisions, the aim is to separate companies that are both technically sound and fundamentally set for more growth. This two-part method tries to find leading stocks before they make their largest price advances.
VIAVI SOLUTIONS INC (NASDAQ:VIAV) stands out as a strong candidate when looked at through this combined view. The company, a supplier of network test, monitoring, and assurance solutions, seems to be performing well from both a price momentum and business growth standpoint.
A Clear Minervini Trend Template Setup
The center of Minervini's strategy is his Trend Template, a group of fixed technical rules made to confirm a stock is in a strong Stage 2 uptrend. VIAV's present chart shows a very close match with these rules:
- Price Above Key Moving Averages: The stock's last price of $35.35 trades well above its rising 50-day ($22.34), 150-day ($16.60), and 200-day ($14.88) simple moving averages (SMAs). This ordered position shows continued buying interest across all time periods.
- Positive Moving Average Order: The shorter 50-day SMA is above both the 150-day and 200-day SMAs, while the 150-day SMA is above the 200-day SMA. This ordered positive position confirms the trend's force and speed.
- Nearness to Highs: A main idea of the strategy is to focus on strength, not low price. VIAV's price is within 25% of its 52-week high of $35.61, showing leadership and momentum instead of trailing in a rebound.
- Large Advance from Lows: The present price is more than 300% above its 52-week low of $8.10, meeting the rule of being at least 30% above the low and marking a strong trend change and continued rise.
- High Relative Strength: With a ChartMill Relative Strength (CRS) score of 98.24, VIAV is doing better than almost all other stocks. Minervini states that real market leaders always show high relative strength, as it points to institutional interest and sector leadership.
This technical view is not random; it mirrors the basic business improvements that are drawing investment and pushing the price upward.
The High-Growth Momentum Driver
While the chart shows the result, the fundamental data shows the reason. VIAV shows the type of quickening business performance that high-growth momentum investors look for. The given numbers show a company in a strong growth period:
- Strong Earnings Growth: The latest quarterly earnings per share (EPS) grew 69.2% year-over-year. More notable is the pattern in the earlier quarters, with growth rates of 150%, 62.5%, and 150%. This sequence of high, and sometimes quickening, quarterly growth is a sign of momentum.
- Steady Earnings Surprises: The company has exceeded EPS estimates in each of the past four quarters, with an average beat of 15.36%. Steady outperformance builds trust with investors and often leads to higher estimates.
- Solid Sales Quickening: Revenue growth has been strong and is quickening. The last quarter saw sales grow 36.4% year-over-year, a large rise from the 15.3% and 15.8% growth seen in the two quarters before. Analyst estimates suggest continued solid growth ahead.
- Positive Analyst Estimate Changes: Possibly one of the clearest signs of continued momentum is analyst action. The average estimate for next year's EPS has been raised by 31.8% over the past three months. Such large upward changes show growing belief in the company's future earnings and are a strong force for more price gains.
This pairing of sound technicals and quickening fundamentals creates a positive cycle: better business results attract buyers, which moves the price into a positive trend, which then attracts more trend-following investment.
Technical Condition and Present Position
A look at the detailed ChartMill Technical Analysis Report for VIAV supports the solid trend template analysis. The report gives the stock a perfect Technical Rating of 10 out of 10, noting its positive long and short-term trends and its place as a top performer, doing better than 98% of the market. The relative strength within its Communications Equipment industry is also high at 89%.
However, the report gives an important note of care for possible buyers: while the technical condition is very good, the Setup Quality rating is low (1 out of 10). This shows that after its strong advance, the stock is up over 44% in the past month alone, the price has become stretched. There is no present, low-risk pause pattern giving a clear entry point. For investors following a strict strategy like Minervini's, this indicates patience. The best method would be to wait for a normal price decline or a time of pause, like a Volatility Contraction Pattern (VCP), to form within the current uptrend before thinking about a new entry. This allows for a better risk/reward position with a clearer level for a protective stop-loss.
Finding Like Opportunities
VIAVI Solutions acts as a clear example of what the combined "High Growth Momentum + Trend Template" screen is made to find. For investors wanting to look for other stocks that meet this strict mix of technical force and fundamental growth quickening, the screen is available.
You can find more possible candidates by running this screen yourself here.
Conclusion
VIAVI Solutions Inc. presents a strong example of the meeting of technical momentum and fundamental growth. It clearly meets the strict technical list of the Minervini Trend Template, trading in a strong uptrend with high relative strength. Fundamentally, it shows the type of quickening earnings, solid sales growth, and positive analyst opinion that high-growth momentum strategies look for. While the present strong move suggests waiting for a better entry point, VIAV shows the profile of a market leader that has gained the notice of both growth and momentum investors. As always, more individual research on the company's market place, competitive field, and future plans is needed before any investment choice.
Disclaimer: This article is for informational and educational purposes only. It is not intended as investment advice, nor does it constitute a recommendation to buy, sell, or hold any security. The analysis is based on data provided and referenced methodologies. Investors should conduct their own research and consider their individual financial circumstances and risk tolerance before making any investment decisions. Please read our full disclaimer here.
