For investors looking to join solid core business progress with positive price patterns, a multi-factor screening method can be an effective instrument. By selecting for stocks that display strong fundamental expansion, good technical condition, and a defined period of sideways movement, the aim is to find candidates ready for a possible upward move. This technique joins the ideas of high-expansion momentum investing, which looks at quickening profits and revenue, with careful technical study to find good entry points. One company that recently appeared from this type of screen is Ventas Inc (NYSE:VTR).
Fundamental Expansion Momentum
Ventas, a top real estate investment trust (REIT) in the senior housing and healthcare properties sector, tells a solid fundamental expansion story. The company’s latest financial results show notable momentum, which is measured by its ChartMill High Growth Momentum Rating of 6. This rating combines a number of important expansion and momentum figures.
- Strong Earnings Expansion: The most notable numbers are in earnings per share (EPS). The company has shown impressive year-over-year expansion in recent quarters:
- EPS expansion (Q-2): 433.3%
- EPS expansion (Q-1): 200.0%
- Latest quarter (Q2Q): 180.0%
- Steady Revenue Growth: Top-line expansion has been solid and quickening, pointing to increasing demand for its properties.
- Sales expansion has quickened in order over the last three quarters, from 10.5% to 13.2%, 18.3%, and most recently 20.4%.
- Earnings Surprises and Cash Flow: Ventas has a full history of exceeding analyst predictions, with an average EPS surprise of 175.3% over the last four quarters. Also, free cash flow per share has expanded by more than 80% in the last year, highlighting the quality of its earnings expansion.
For a high-expansion momentum plan, these points are vital. Quickening sales, strong earnings expansion, and steady positive surprises point to a company that is not only expanding but beating market predictions, a known feature of leading stocks during market advances.
Technical Condition and Formation
While solid fundamentals give the "why," technical study gives the "when." According to the detailed ChartMill technical report, Ventas receives high marks for both trend condition and formation quality, each getting a rating of 8 out of 10.
The technical rating of 8 shows a stock in a good upward trend. The long-term trend is positive, and Ventas performs better than 80% of all stocks over the last year. It also places in the top 14% of its Diversified REITs industry group, showing comparative strength, a main idea of momentum investing. The stock trades above its important long-term moving averages (SMA 50, 100, and 200), which are all moving up, confirming the positive structure.
Maybe more significant for a planned entry, the formation rating of 8 points to a positive price pattern. The report states that prices have been moving sideways in an area between about $74 and $80 over the last month, with recent price swings becoming smaller. This sideways movement inside a set upward trend often comes before a new upward phase. The study finds a clear support area between $74.90 and $76.93, giving a reasonable zone for a stop-loss order to control risk.
A Joining Opportunity
The joining of these elements makes Ventas a notable candidate for the high-expansion momentum method. The fundamental view shows a company seeing a strong earnings rebound and quickening revenue expansion. Technically, the stock is in a confirmed upward trend and has recently formed a period of sideways movement, giving a possible entry point with clear risk.
This combination answers the central questions of momentum investing: Is the company's expansion quickening (yes, based on EPS and sales trends)? Is the stock market leadership confirmed (yes, based on its comparative strength and technical rating)? Is there a point to enter with controlled risk (yes, based on the high formation rating and defined support levels)?
Find Other Possible Formations
Screens that join strict expansion, technical, and formation filters can efficiently reveal ideas like Ventas for more study. Investors wanting to find other stocks that fit similar conditions of solid expansion momentum paired with positive technical formations can look at the pre-set screen here.
Disclaimer: This article is for information only and is not investment advice, a suggestion, or an offer to buy or sell any security. The data and study shown are from sources thought to be dependable, but their correctness is not assured. Investing has risk, including the possible loss of the original amount invested. Always do your own study and think about talking with a qualified financial advisor before making any investment choices.
