The method used to find possible investment choices joins a strict technical system with attention to fundamental growth momentum. This process is based on the methods made famous by noted trader Mark Minervini, whose Trend Template is made to separate stocks showing solid, continued upward trends. By sorting for securities that fit these defined technical conditions, such as trading above important moving averages and showing high relative strength, the screen makes certain choices are already in a positive phase of market leadership. This is then combined with a High Growth Momentum (HGM) rating, which assesses a company's earnings and sales speed, profit margin directions, and analyst estimate changes. The aim is to locate companies where strong technical momentum is backed by fundamental growth, a pairing that has come before major price gains in the past.
VICOR CORP (NASDAQ:VICR) appears as a stock that meets this two-part filter study, offering a case example in matching technical health with speeding business results.
Technical Match with the Minervini Trend Template
A central idea of the Minervini method is to invest following the current trend, steering clear of the problems in trying to buy a declining stock. The Trend Template gives a step-by-step list to verify a stock is in a confirmed Stage 2 rise. Vicor's present chart shows a clear match with these rules:
- Price Above Key Moving Averages: The stock's last price of $157.67 rests well above its rising 50-day ($118.04), 150-day ($77.56), and 200-day ($69.27) simple moving averages. This layered order points to continued buying interest across all important time periods.
- Moving Average Order: The 50-day SMA is above both the 150-day and 200-day SMAs, and the 150-day SMA is above the 200-day SMA. This step-by-step order confirms a sound, set upward trend where shorter-term momentum is guiding longer-term course.
- Nearness to Highs: Trading at $157.67, VICR is within 10% of its 52-week high of $174.80, easily meeting the "within 25% of the high" rule. More significantly, the present price is over 300% above its 52-week low of $38.93, showing the strong recovery and momentum that Minervini looks for.
- Better Relative Strength: With a ChartMill Relative Strength (CRS) score of 98.46, VICR is doing better than almost 99% of the whole market. High relative strength is a required filter in the method, as it finds sector and market front-runners that institutions are buying.
This technical view shows why the Trend Template is basic: it mechanically filters out weak or consolidating stocks, directing focus onto those with shown health and a good chance of continuing.
Fundamental Support for High Growth Momentum
While the chart displays the "what," the High Growth Momentum rating aims to clarify the "why." For a trend to last, it should be supported by getting better business fundamentals. Vicor's recent results show several signs of speed that support its high growth rating.
- Earnings Speed: The newest quarter shows large year-over-year EPS growth of 142.3%. While earlier quarters were mixed, the major positive change for the next quarter, with estimates asking for 93.8% growth, hints analysts view the positive direction continuing.
- Solid Sales Growth: Revenue growth has become regularly positive, with the latest quarter up 18.5% year-over-year. Estimates for the next quarter forecast a further speed increase to 14.3% growth.
- Getting Better Profitability: After a decrease, the company's profit margin in the last reported quarter returned to a sound 25.6%. Possibly more revealing is the large 686% growth in Free Cash Flow over the past year, pointing to good cash creation and financial condition.
- Positive Analyst View: The average estimate for next year's earnings has been changed upward by almost 65% over the past three months. Such strong upward changes are a clear sign of a fundamental driver that can push further institutional interest and price momentum.
These parts are important for the high-growth side of the method. Minervini himself notes that the largest stock market successes are nearly always backed by solid, and often speeding, sales and earnings growth. The HGM rating methodically finds these forces, making sure the technical move upward has a fundamental cause.
Technical Condition and Present Position
A look at Vicor's technical analysis report gives a brief summary of its market stance. The stock receives a complete Technical Rating of 10/10, showing very good health across short-term and long-term trends. It is reaching new 52-week highs while doing better than 98% of the market and 96% of its Electrical Equipment industry group.
However, the report also gives a word of care for immediate buying: the Setup Quality rating is presently a low 3. The study states that "price movement has been a little bit too volatile to find a nice entry and exit point," suggesting the stock may be stretched in the short term after its strong rise. For trend-following methods, this shows the importance of telling apart a technically sound stock and one giving a low-risk chance to buy. The suggestion here matches Minervini's rule: wait for a forming consolidation or volatility decrease pattern to appear before starting a position.
Locating Related Chances
Vicor Corp shows the kind of choice that comes up when joining trend-following technicals with growth momentum fundamentals. For investors looking for other stocks that meet this specific mix of conditions, the set screen can be a beginning point for more study. You can find more possible choices by running the 'High Growth Momentum + Trend Template' screen here.
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 study is based on given data and described methods, which may change. Investors should do their own study and talk with a qualified financial advisor before making any investment choices. Please read our full disclaimer here.