For investors looking to join solid fundamental momentum with good technical entry points, a multi-layered screening method can be very useful. By selecting for stocks with a high ChartMill Technical Rating (showing a steady uptrend), a high Setup Rating (pointing to a good consolidation pattern), and a firm High Growth Momentum Rating (showing rising earnings and sales growth), one can find securities that fit with growth-focused methods like CANSLIM. This process aims to find companies both seeing strong business momentum and offering a technical chance with less risk to start a position.
WHEATON PRECIOUS METALS CORP (NYSE:WPM) appears from such a screen, presenting a strong profile for growth and momentum investors. The company, a top precious metals streaming firm, shows the sort of solid fundamental increase that is central to the High Growth Momentum Rating.
Fundamental Growth Momentum
The High Growth Momentum Rating brings together several important growth and momentum indicators, and Wheaton Precious Metals scores well across this range. The company is showing very good earnings and sales growth, a key part for any growth-centered plan.
- Strong Earnings Growth: The company's earnings per share (EPS) growth is rising quickly on a year-over-year basis for recent quarters. The latest quarter saw EPS jump 83.4% compared to the same period last year, after gains of 91.2% and 52.9% in the two quarters before. This sequence of increase is an important sign for momentum investors.
- Solid Sales Growth: Revenue growth tells a similar story of solid momentum. Sales increased 54.5% in the last quarter, following good growth of 68.3% and 58.5% in the earlier quarters. This steady, high-level growth supports the earnings increase and points to firm underlying demand for its streaming agreements.
- Positive Surprises and Revisions: The company has exceeded EPS estimates in all of the last four quarters, with an average surprise of 4.94%. Also, analysts have been raising their estimates, with the average EPS estimate for the next year up 9.5% over the last three months. This pairing of beating expectations and getting higher revisions is a standard sign of positive earnings momentum.
- Good Cash Flow and Margin Trends: Free cash flow per share has increased 57.1% over the past year, giving financial room. Importantly, the profit margin in the last reported quarter was 77.1%, showing a large growth from 58.1% and 54.0% in the prior quarters, meaning better operational efficiency.
Technical Strength and Setup Quality
While the fundamental view is firm, the technical analysis shows a similarly attractive chart structure. According to the detailed technical report, WPM has top-level technical health together with a good-quality setup.
- Top Technical Rating: WPM receives a ChartMill Technical Rating of 10 out of 10, putting it with the market's most steady trending stocks. The report states both its long-term and short-term trends are positive, and it is doing better than 94% of all stocks over the past year. The stock is trading above all main moving averages (20, 50, 100, and 200-day), which are all in rising patterns, confirming the strength of the uptrend.
- Good-Quality Consolidation Setup: With a Setup Rating of 8, WPM is now forming a positive pattern. The report describes a time of consolidation and lower volatility after its recent rise, which can give a more clear entry point. A defined support area is found between $114.63 and $117.86, made by a combination of trendlines and moving averages, giving a reasonable area for a stop-loss order.
- Clear Risk Parameters: The technical analysis indicates a possible setup with an entry near $119.82 (above a moving average) and an exit stop below the support area around $114.62. This sets the trade's risk at about 4.3%, allowing for exact position sizing based on an investor's risk comfort. The setup is marked by little overhead resistance, suggesting a clear way upward if the stock moves up from its current consolidation.
A Joining Opportunity
Wheaton Precious Metals presents a case where solid fundamental momentum joins with a technically sound chart pattern. The High Growth Momentum Rating confirms the company's strong and rising financial performance, the needed "growth" part of the method. At the same time, the top Technical and Setup Ratings deal with the "when" to buy, finding a stock in a steady uptrend that is resting in a consolidation, possibly giving a good risk/reward entry. This match is what screens joining these ratings are made to find.
For investors wanting to look at other securities that meet this mix of high growth momentum and technical breakout setups, the screen used to find WPM is found here: High Growth Momentum Breakout Setups Screen.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The analysis is based on data provided and reflects conditions at a specific point in time. Investing involves risk, including the potential loss of principal. Always conduct your own due diligence and consider consulting with a qualified financial advisor before making any investment decisions.
