Viper Energy Inc - Class A (NASDAQ:VNOM): A Strong Growth Stock with Breakout Potential

Investors looking for high-growth opportunities often use both fundamental and technical analysis to find stocks with strong earnings potential and positive chart patterns. The "Strong Growth Stocks with Good Technical Setup Ratings" screen focuses on companies with notable revenue and earnings growth, good profitability, and stable financials, while also displaying technical consolidation or breakout signals. This combined method helps identify stocks that have strong business fundamentals and show signs of momentum or possible price reversals.

Viper Energy Inc - Class A (NASDAQ:VNOM) appears as a candidate matching this strategy. The company, which owns mineral and royalty interests in the Permian Basin, has displayed strong growth metrics along with a technical setup indicating a possible breakout. Below, we explore why VNOM fits the criteria for this screening method.

Fundamental Strengths Supporting Growth Potential

Based on ChartMill’s Fundamental Analysis Report, VNOM scores a 6 out of 10 overall, with key strengths in growth and profitability:

• Revenue Growth: The company has achieved a notable 23.6% average annual revenue growth in recent years, with projections indicating a 35% annual growth rate in the future. This places VNOM ahead of many competitors in the Oil, Gas & Consumable Fuels sector.
• Profitability Margins: VNOM has a gross margin of 92.93%, exceeding 97.6% of industry peers, along with an operating margin of 59.06%, ranking in the top 8% of its sector.
• Dividend Appeal: While not purely a growth stock due to its 3.54% dividend yield, VNOM has raised its dividend at an 8.8% annual rate over the past decade, reflecting steady cash flow.

However, there are some concerns:

• Valuation: The stock trades at a P/E of 20.77, slightly above the industry average, which may indicate it is priced higher than near-term earnings justify.
• Financial Health: The Altman-Z score of 1.40 suggests some bankruptcy risk, though liquidity remains solid with a current ratio of 6.15.

Technical Setup Indicating a Breakout Opportunity

The Technical Analysis Report shows a setup rating of 8/10, pointing to a possible breakout despite a low overall technical score (1/10). Key observations include:

• Consolidation Pattern: VNOM has traded between $36.02 and $39.19 over the past month, with the price now near the mid-range. A move above $38.66 could signal upward momentum.
• Support and Resistance Levels:
  • Support: Strong areas exist at $37.80–$38.22 (moving averages and trendlines) and $36.49–$36.59 (multi-timeframe trend support).
  • Resistance: A break above $38.66–$39.65 could lead to $42.12–$43.19.
• Volume and Liquidity: With an average daily volume of 1.84 million shares, VNOM provides enough liquidity for trading.

Why This Combination Is Important

Growth stocks with solid fundamentals but weak price action can offer opportunities when technical patterns hint at a reversal or breakout. VNOM’s strong revenue growth and profitability make it an interesting candidate if technical resistance is broken, as improving market sentiment could align with its business performance.

For investors seeking similar opportunities, the Strong Growth Stocks with Good Technical Setup Ratings screen offers additional stocks that meet these conditions.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Investors should perform their own research or consult a financial advisor before making decisions.