Growth investing works best when you combine two distinct types of analysis: the fundamentals tell you what to buy, and the technicals tell you when to buy it. The "Strong Growth Stocks with Good Technical Setup Ratings" screen is designed to do exactly that. It starts by filtering for companies with accelerating earnings and revenue, decent profitability, and a healthy balance sheet. Then it overlays a technical setup filter that looks for stocks consolidating near support, often with decreasing volatility and signs of institutional accumulation. The result is a shortlist of names that are both fundamentally growing and technically ready for a breakout. One name that currently passes all of these filters is CareTrust REIT Inc (NYSE:CTRE), a healthcare-focused real estate investment trust.
Recent Performance
CTRE has delivered a solid 23.3% total return over the past twelve months, outperforming 59% of all stocks in the broader market. However, the stock has pulled back sharply in the last month, falling roughly 10.7% from its highs. It currently trades near $37.06, which is in the middle of its 52-week range of $29.91 to $43.08. The S&P500 has been trending near new highs, so CTRE is clearly lagging the broader market in the short term. That underperformance, though, is part of what makes the setup interesting — the stock is consolidating near a support zone, which is precisely the kind of base-building behavior that growth-oriented technical setups look for.
The longer-term picture is more constructive. Over the past six months CTRE is up 2%, and over three months it has gained about 2.7%. The 100-day and 200-day simple moving averages are still rising, suggesting the long-term trend is intact even if the short-term and medium-term trends have turned negative.
Growth Metrics
This is where CTRE really stands out. According to the fundamental analysis report, the company earns a ChartMill Growth Rating of 7 out of 10, which is strong for any REIT. The key numbers:
- EPS growth (last year): 63.16% — far above the typical 20% threshold used by growth screens
- Revenue growth (last year): 58.43% — more than triple the 15% minimum
- Average annual EPS growth (multi-year): 12.77%
- Average annual revenue growth (multi-year): 21.72%
- Forward revenue growth estimate (annualized): 17.38%
The revenue growth is consistent and accelerating, which is the primary driver for growth investors. Revenue is harder to manipulate than earnings, and CTRE's top line has been growing at a compounded rate above 20% for several years. The forward estimates show this growth continuing at a similar pace. For a REIT, which typically grows through a combination of rent escalators and acquisitions, this level of expansion signals strong execution and a favorable tailwind from aging demographics and healthcare demand.
Valuation Metrics
Growth stocks often carry a premium valuation, and CTRE is no exception. The current Price/Earnings ratio is 23.91, and the Price/Forward Earnings ratio is 23.31. Both are above the company's own historical averages, but context matters:
- Within the Diversified REITs industry, CTRE is actually cheaper than 79.49% of its peers on a trailing P/E basis
- Compared to the S&P500, CTRE's P/E of 23.91 is slightly below the index average of 26.63
- The company's Profitability Rating of 8/10 — including margins that rank in the top of the industry (operating margin of 66.41%, profit margin of 63.97%) — helps justify the multiple
The valuation score from ChartMill is a low 3 out of 10, which is a warning flag. But growth investors typically accept higher multiples when the growth trajectory is strong and the underlying profitability is excellent. CTRE's combination of high margins, solid ROIC (5.43%), and a clean balance sheet (Debt/Equity of 0.22) provides a margin of safety that a pure "value" screen would miss.
Technical Setup
The technical analysis report gives CTRE a Setup Rating of 7 out of 10, which is the second-highest score in the screen. This is a clear signal that despite the recent price weakness, the stock is setting up for a potential move higher. Several factors support this:
- Support zone identified: A key support area exists between $35.93 and $36.37, formed by multiple trend lines across daily and weekly timeframes. The current price of $37.06 is just above this zone, offering a defined risk level.
- Consolidation pattern: The stock has been trading in a range roughly $36.05 to $42.00 over the past month, and is now near the lower end of that range. This type of base-building, with declining volatility, is exactly what growth setup screens look for.
- Institutional accumulation: The report notes that "large players showed an interest for CTRE in the last couple of days," as measured by the Effective Volume indicator. This is a bullish sign often preceding a breakout.
- Volume spike: Trading volume has increased noticeably in the last few days, which can indicate that smart money is positioning ahead of a catalyst.
The overall Technical Rating is a low 1 out of 10 because both short-term and medium-term trends are negative. That's a legitimate concern, but the setup rating is forward-looking: it measures the probability of a trend reversal, not the current trend. In growth investing, buying into a consolidation near support — a "base" — is the classic entry point. O'Neil's CANSLIM framework and Minervini's SEPA approach both emphasize this pattern.
Profitability and Financial Health
A growth stock cannot sustain its trajectory if the underlying business is unprofitable or over-leveraged. CTRE scores well on both fronts:
The health rating is pulled down by value destruction (ROIC below WACC) and a rising share count. Neither is ideal, but the low debt level and strong interest coverage provide ample buffer. For growth investors, the profitability metrics are more important than the absolute health score.
Analyst Views
While the provided data does not include specific analyst price targets, the forward estimates tell a clear story. Analysts expect revenue to grow at an average annual rate of 17.38% over the next few years, which is well above the typical REIT growth rate. Earnings per share are expected to grow at a more modest 2.64% annually, suggesting margin pressure or higher interest costs. However, the strong revenue growth implies that the company is expanding its portfolio and capturing market share, which is the primary driver of long-term value creation in net-lease REITs.
The market is pricing CTRE at roughly 23x forward earnings, which is not excessive for a company growing revenues at 17% and offering a 4.17% dividend yield. The combination of growth and income makes it an attractive candidate for investors who want exposure to the healthcare real estate theme without paying a huge premium.
What to Watch
The most important levels to monitor are:
- Support: $36.08 (the midpoint of the identified support zone)
- Resistance: $38.64 to $39.36 (moving average cluster), then $41.61 and $42.45
A break above $39.36 with rising volume would confirm the setup and trigger a potential move back toward the 52-week high of $43.08. A drop below $35.93 would invalidate the pattern and suggest further downside. Given the strong fundamentals and the improving technical picture, CTRE is worth watching closely for a buyable pullback.
Interested in finding more stocks like this? You can run this exact screen yourself on ChartMill, combining strong growth, decent profitability and health, with technical setup patterns. Click here to see the full list of stocks passing the "Strong Growth Stocks with Good Technical Setup Ratings" screen.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.
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CareTrust REIT Inc (NYSE:CTRE) Shows Strong Growth and Technical Setup for a Potential Breakout
Growth investing works best when you combine two distinct types of analysis: the fundamentals tell you what to buy, and the technicals tell you when to buy it. The "Strong Growth Stocks with Good Technical Setup Ratings" screen is designed to do exactly that. It starts by filtering for companies with accelerating earnings and revenue, decent profitability, and a healthy balance sheet. Then it overlays a technical setup filter that looks for stocks consolidating near support, often with decreasing volatility and signs of institutional accumulation. The result is a shortlist of names that are both fundamentally growing and technically ready for a breakout. One name that currently passes all of these filters is CareTrust REIT Inc (NYSE:CTRE), a healthcare-focused real estate investment trust.
Recent Performance
CTRE has delivered a solid 23.3% total return over the past twelve months, outperforming 59% of all stocks in the broader market. However, the stock has pulled back sharply in the last month, falling roughly 10.7% from its highs. It currently trades near $37.06, which is in the middle of its 52-week range of $29.91 to $43.08. The S&P500 has been trending near new highs, so CTRE is clearly lagging the broader market in the short term. That underperformance, though, is part of what makes the setup interesting — the stock is consolidating near a support zone, which is precisely the kind of base-building behavior that growth-oriented technical setups look for.
The longer-term picture is more constructive. Over the past six months CTRE is up 2%, and over three months it has gained about 2.7%. The 100-day and 200-day simple moving averages are still rising, suggesting the long-term trend is intact even if the short-term and medium-term trends have turned negative.
Growth Metrics
This is where CTRE really stands out. According to the fundamental analysis report, the company earns a ChartMill Growth Rating of 7 out of 10, which is strong for any REIT. The key numbers:
The revenue growth is consistent and accelerating, which is the primary driver for growth investors. Revenue is harder to manipulate than earnings, and CTRE's top line has been growing at a compounded rate above 20% for several years. The forward estimates show this growth continuing at a similar pace. For a REIT, which typically grows through a combination of rent escalators and acquisitions, this level of expansion signals strong execution and a favorable tailwind from aging demographics and healthcare demand.
Valuation Metrics
Growth stocks often carry a premium valuation, and CTRE is no exception. The current Price/Earnings ratio is 23.91, and the Price/Forward Earnings ratio is 23.31. Both are above the company's own historical averages, but context matters:
The valuation score from ChartMill is a low 3 out of 10, which is a warning flag. But growth investors typically accept higher multiples when the growth trajectory is strong and the underlying profitability is excellent. CTRE's combination of high margins, solid ROIC (5.43%), and a clean balance sheet (Debt/Equity of 0.22) provides a margin of safety that a pure "value" screen would miss.
Technical Setup
The technical analysis report gives CTRE a Setup Rating of 7 out of 10, which is the second-highest score in the screen. This is a clear signal that despite the recent price weakness, the stock is setting up for a potential move higher. Several factors support this:
The overall Technical Rating is a low 1 out of 10 because both short-term and medium-term trends are negative. That's a legitimate concern, but the setup rating is forward-looking: it measures the probability of a trend reversal, not the current trend. In growth investing, buying into a consolidation near support — a "base" — is the classic entry point. O'Neil's CANSLIM framework and Minervini's SEPA approach both emphasize this pattern.
Profitability and Financial Health
A growth stock cannot sustain its trajectory if the underlying business is unprofitable or over-leveraged. CTRE scores well on both fronts:
Profitability Rating: 8/10
Health Rating: 5/10
The health rating is pulled down by value destruction (ROIC below WACC) and a rising share count. Neither is ideal, but the low debt level and strong interest coverage provide ample buffer. For growth investors, the profitability metrics are more important than the absolute health score.
Analyst Views
While the provided data does not include specific analyst price targets, the forward estimates tell a clear story. Analysts expect revenue to grow at an average annual rate of 17.38% over the next few years, which is well above the typical REIT growth rate. Earnings per share are expected to grow at a more modest 2.64% annually, suggesting margin pressure or higher interest costs. However, the strong revenue growth implies that the company is expanding its portfolio and capturing market share, which is the primary driver of long-term value creation in net-lease REITs.
The market is pricing CTRE at roughly 23x forward earnings, which is not excessive for a company growing revenues at 17% and offering a 4.17% dividend yield. The combination of growth and income makes it an attractive candidate for investors who want exposure to the healthcare real estate theme without paying a huge premium.
What to Watch
The most important levels to monitor are:
A break above $39.36 with rising volume would confirm the setup and trigger a potential move back toward the 52-week high of $43.08. A drop below $35.93 would invalidate the pattern and suggest further downside. Given the strong fundamentals and the improving technical picture, CTRE is worth watching closely for a buyable pullback.
Interested in finding more stocks like this? You can run this exact screen yourself on ChartMill, combining strong growth, decent profitability and health, with technical setup patterns. Click here to see the full list of stocks passing the "Strong Growth Stocks with Good Technical Setup Ratings" screen.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.
Read full article here »