In growth investing, few methods are as structured and clear as the strategy supported by Mark Minervini. His system, called SEPA (Specific Entry Point Analysis), is a strict combination of technical and fundamental analysis made to find leading stocks early in their major price increases. The main technical filter for this method is the Minervini Trend Template, a group of fixed rules that confirm a stock is in a strong, confirmed uptrend. To add to this, growth investors frequently include fundamental filters for improving earnings and sales, looking for firms with the financial strength to continue their price advances. A stock that meets both the strict Trend Template and shows solid high-growth traits makes a strong case for more review.
WELLTOWER INC (NYSE:WELL) now shows a profile that matches this two-part strategy closely. The real estate investment trust, which concentrates on health care infrastructure such as seniors housing and outpatient medical properties, is displaying the sort of strong technical and fundamental progress that growth investors look for.
A Clear Trend Template Setup
The Minervini Trend Template is made to remove weak trends and find stocks where buyers clearly have control across different time periods. Welltower’s present chart shows an almost perfect match with these rules:
- Price Above Key Moving Averages: The stock’s last price of $210.72 trades well above its rising 50-day ($190.41), 150-day ($179.65), and 200-day ($172.56) simple moving averages. This stacked order is a clear sign of a solid Stage 2 uptrend.
- Moving Average Order: The 50-day SMA is above both the 150-day and 200-day SMAs, and the 150-day is above the 200-day. This sequence confirms the trend’s strength and speed.
- Nearness to Highs: At $210.72, WELL is trading within 1% of its 52-week high of $212.62, meeting the "within 25% of the high" rule easily. It is also about 62% above its 52-week low, well beyond the 30% minimum requirement. This shows the stock is displaying strength, not bouncing back from a low point.
- Better Relative Strength: With a ChartMill Relative Strength (CRS) score of 83.18, WELL is doing better than most of the market. Minervini points out that real leaders have RS scores usually above 70, and ideally in the 80s or 90s, as institutional funds move into the top performers first.
This combination of factors gives WELL a full Technical Rating of 10 from ChartMill, showing it is one of the most technically sound stocks in the market. The report states both its short-term and long-term trends are positive, and it is doing better than 90% of similar firms in the Diversified REITs industry.
Fundamentals Supporting High Growth Progress
While the Trend Template finds the "when," fundamental analysis finds the "why." For a stock to maintain a strong breakout, it needs the driver of solid and getting better business results. Welltower’s recent financial numbers indicate it has that driver.
- Strong Earnings Increase: The latest quarter shows a very high year-over-year EPS growth of 663%. While this is partly because of a lower comparison period, it comes after a full-year (TTM) EPS growth of 74%. This sort of improvement is a main part of the SEPA system, which looks for companies reporting better than expected results.
- Solid Sales Growth: Revenue growth has been consistently good, with the last quarter up over 41% year-over-year. The company has exceeded revenue estimates in each of the past four quarters, with an average beat of 2.4%, showing reliable performance.
- Widening Margins: A sign of a good growth company is the ability to turn higher sales into larger profits. Welltower’s profit margin in the last reported quarter was 10.45%, a notable gain from the 5.33% margin reported three quarters before. This pattern of growing margins points to better operational efficiency and pricing ability within its healthcare real estate holdings.
- Good Cash Flow Production: With a Free Cash Flow per Share of $4.06 and FCF growth of 88% over the past year, the company is creating the capital needed to support more growth and possibly return capital to shareholders.
These numbers lead to a High Growth Momentum (HGM) rating that makes it suitable for growth-focused screens, showing the company’s fundamental direction supports its technical price strength.
Present Technical Condition and Points to Note
According to the detailed ChartMill Technical Report, WELL’s technical condition is very good. However, the report also gives an important note for possible investors: the stock’s Setup Quality Rating is now low at 1. This is not a negative comment on the trend, but a significant tactical point. It shows that the stock has become "stretched" after its recent fast rise, trading near the top of its one-month range without a notable period of consolidation.
For followers of the Minervini method, this is a key detail. The approach focuses on lower-risk entry points, often waiting for a "Volatility Contraction Pattern" (VCP) or a retreat to a key moving average before starting a position. While WELL meets all the criteria for a watchlist, the preferred entry point following the method would be during a time of tighter, lower-volume consolidation, which would give a clearer turning point and a closer stop-loss level. The technical report finds several support areas, with the closest ranging from $190.41 to $191.53, which could be zones of interest if a controlled pullback happens.
Locating Comparable Prospects
Welltower Inc. is a prime example of the sort of security that systematic screens are built to find: a leader in its field with a strong price trend supported by improving fundamentals. For investors looking to find other candidates that meet this mix of strict technical and growth standards, the preset screen is ready for more study.
Click here to view the "High Growth Momentum + Trend Template" screen and see present results.
Disclaimer: This article is for informational and educational purposes only. It is not intended as investment advice, a recommendation to buy or sell any security, or a guarantee of future performance. Investors should do their own complete research, think about their financial situation and risk tolerance, and talk with a qualified financial advisor before making any investment decisions. Past performance is not a guide to future results.
