Investors looking to join strict technical rules with an emphasis on fundamental growth frequently consider methods like the one made common by trader Mark Minervini. His method, called Specific Entry Point Analysis (SEPA), methodically finds stocks showing both firm price trends and improving business results. The objective is to locate market leaders early in their large price gains by using a two-part filter: a firm technical "Trend Template" to verify the stock is in a solid uptrend, and fundamental checks to confirm the company's profit and sales speed. This method tries to take part in the large moves of high-growth firms while employing exact entry points and firm risk rules to limit loss.
A recent filter made to find such chances has identified Washington Trust Bancorp (NASDAQ:WASH) as a candidate worth further study. The filter uses Minervini's main technical rules together with a proprietary High Growth Momentum (HGM) score, looking for stocks that are not only technically healthy but also show the fundamental traits of a growth narrative.
Reviewing the Technical Trend Template
For Minervini, a stock's chart must first meet a set of firm technical requirements before any fundamental review is done. These rules are made to make sure an investor is only purchasing into clear, solid uptrends, thus moving with the market's force. Washington Trust Bancorp presently seems to meet the main parts of this Trend Template:
- Price Above Key Moving Averages: The stock is trading notably above its 50-day ($29.86), 150-day ($28.92), and 200-day ($28.68) simple moving averages (SMAs). This order shows continued buying interest across short, medium, and long-term periods.
- Positive Moving Average Order: The important moving averages are in the correct bullish 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. Also, the 200-day SMA itself is moving up, confirming the long-term trend is good.
- Nearness to Highs: A key part of the method is to focus on strength, not weakness. WASH is presently within 2% of its 52-week high of $34.95, having risen over 37% from its 52-week low of $24.95. This action shows leadership and an absence of overhead supply.
- Firm Relative Strength: The stock has a ChartMill Relative Strength (CRS) score of 77.38, meaning it is doing better than more than three-quarters of the market. High relative strength is a sign of market leaders, a main belief of the Minervini method.
This combination of technical factors indicates WASH is in a clear "Stage 2" rising phase, the exact setting where Minervini aims to invest.
Reviewing High Growth Momentum Fundamentals
While the Trend Template makes sure a stock is technically ready, the SEPA method requires a fundamental catalyst, often speeding growth in profits and sales. The filter's HGM score selects for these traits. A review of WASH's recent financial numbers shows several good growth signs that probably helped its filter result:
- Strong Recent Earnings Growth: The company's latest quarterly earnings per share rose about 40.7% compared to the same quarter last year. This shows a notable speed increase and acts as a possible fundamental catalyst.
- Positive Estimate Changes: Analyst opinion is getting better, with the average earnings estimate for the next fiscal year raised by over 6% in the last three months. Upward changes often come before continued institutional buying.
- Firm Free Cash Flow Creation: The company's trailing twelve-month free cash flow per share grew almost 35% year-over-year, showing healthy basic business cash creation beyond reported earnings.
It is important to see that not all fundamental numbers are equally firm. Revenue growth has been changeable on a quarterly basis, and longer-term yearly earnings growth has been moderate. This mixed view shows why the Minervini method uses a group of fundamental filters; it looks for stocks showing improvement and speed increase in key areas, especially in the most recent periods, which WASH shows in its latest EPS report.
Technical Condition and Present Pattern
According to ChartMill's automated technical report, WASH is given a high technical score of 8 out of 10, reflecting its firm trend across multiple timeframes. The report states the stock is making new 52-week highs with supporting volume, a classic sign of strength. However, it also gives a important note of care for entry timing: the present Setup Quality score is low (1 out of 10). This shows that after its recent solid rise, the stock is viewed as "extended," meaning it has moved sharply away from possible support levels and does not presently offer a low-risk, high-quality chart pattern for new entry.
For a Minervini-style investor, this technical report summary is very useful. It confirms the stock's qualifying trend (answering "which stock?") but clearly states that the ideal "when to buy" moment, such as during a period of low movement or a retreat to support, is not now available. A complete review of the technical factors, including noted support and resistance areas, is available in the detailed WASH technical analysis report.
Summary
Washington Trust Bancorp offers a notable example of a stock that meets the initial filter requirements of a joined Minervini and high-growth momentum method. Its chart meets the strict Trend Template, confirming it is part of a firm market uptrend with leading relative strength. Fundamentally, it shows signs of speed increase with its latest quarterly earnings rise and positive analyst changes.
For growth-focused investors, WASH stands as a possible candidate for a watchlist. The disciplined method required by the strategy, however, would propose waiting for a more favorable pattern, a time of consolidation or a retreat toward defined support, to offer a better balance of risk and possible gain before any commitment. The present technical analysis directly proposes such patience.
Interested in finding other stocks that meet this strict mix of technical and growth filters? You can run the "High Growth Momentum + Trend Template" filter yourself to review present market chances. Click here to access the filter.
Disclaimer: This article is for informational and educational purposes only. It is not intended as investment advice, a recommendation, or an offer or solicitation to buy or sell any securities. The analysis is based on data provided and certain methodologies, but past performance is no guarantee of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
