The combination of Mark Minervini’s Trend Template and a focus on High Growth Momentum (HGM) creates a strong framework for identifying stocks that are not only technically strong but also backed by accelerating fundamentals. The Trend Template ensures a stock is in a confirmed uptrend with aligned moving averages, strong relative strength, and proximity to highs. The HGM rating then adds a layer of fundamental validation, focusing on earnings and sales acceleration, margin improvement, and positive revisions. This dual approach helps traders and investors zero in on stocks that are leading both in price action and in business performance.
Microchip Technology Inc. (NASDAQ:MCHP) emerges as a candidate that checks many of these boxes, making it worth a closer look for those following this disciplined strategy.
Meeting the Trend Template
Microchip Technology (MCHP) currently satisfies nearly all of Minervini’s core technical criteria, which are designed to isolate stocks in a healthy Stage 2 uptrend.
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Moving Average Alignment: The stock is trading above its 50-day SMA ($92.28), 150-day SMA ($76.27), and 200-day SMA ($73.02). The 50-day SMA is above both the 150-day and 200-day SMAs, and the 150-day SMA is also above the 200-day SMA. All three key moving averages (50, 150, and 200-day) are currently trending upward, confirming long-term momentum.
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52-Week Range: At a current price of $92.48, MCHP is approximately 90% above its 52-week low of $48.52 and within 13% of its 52-week high of $105.91. This satisfies the rules of being at least 30% above the low and within 25% of the high, placing it in the ideal zone for capturing continued strength.
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Relative Strength: The ChartMill Relative Strength (CRS) score stands at 87.67, meaning it has outperformed nearly 88% of all stocks in the database. This is well above the minimum threshold of 70, meeting Minervini’s preference for leaders in the top quintile.
The stock’s long-term trend is positive, while the short-term trend is currently neutral. This suggests a consolidation phase, which often precedes the next leg higher.
High Growth Momentum Fundamentals
Minervini’s strategy doesn’t stop at the chart. The strongest moves are often backed by companies that are accelerating their earnings and sales. MCHP’s recent numbers show a clear inflection point after a period of decline.
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Earnings Acceleration: The most recent quarter (Q2Q) showed EPS growth of 418.2% compared to the same quarter last year. This follows a previous quarter growth of 120%. After several quarters of negative comparisons (Q-2: -23.9%, Q-3: -49.1%), this represents a strong turnaround. Analysts expect this momentum to continue, with the next quarter estimated at 161.9% growth.
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Revenue Growth: Sales growth (Q2Q) came in at 35.1%, a sharp acceleration from the previous quarter’s 15.6%. This positive trend is a critical component of the HGM model. The last three full fiscal years show a recovery from -42.3% growth to the current trailing twelve months growth of 7.1%.
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Profitability & Revisions: Profit margins have improved significantly, from 2.94% in the prior quarter to 8.88% in the most recent quarter. The company has beaten EPS estimates in all of the last four quarters, with an average beat of 7.4%. Upward revisions from analysts are also strong, with next year’s EPS estimates revised up by 20.9% over the last three months.
This combination of accelerating earnings, rising sales, expanding margins, and strong analyst revisions fits the profile of a stock that may be entering a new growth phase.
Technical Assessment & Setup Quality
According to the ChartMill Technical Report, MCHP scores a 7 out of 10 for both its Technical Rating and its Setup Quality Rating. This indicates the stock is technically solid and currently forming a consolidation pattern. The report identifies a support zone around $87.91 to $88.98 and a resistance level near $92.92. A breakout above this resistance could provide an entry point, with a logical stop-loss placed below the support zone to manage risk.
Screening for More Opportunities
This analysis is just one example of how to combine Minervini’s trend rules with high growth fundamentals. For a continuously updated list of stocks that meet these combined criteria, you can access the live screen used for this selection. Click here to view more results from the ‘High Growth Momentum + Trend Template’ screen and explore other potential setups.
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 consider your financial situation before making any trading decisions.
Read full article here »
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Microchip Technology Inc (NASDAQ:MCHP) Shows Strong Trend Template and High Growth Momentum Setup
The combination of Mark Minervini’s Trend Template and a focus on High Growth Momentum (HGM) creates a strong framework for identifying stocks that are not only technically strong but also backed by accelerating fundamentals. The Trend Template ensures a stock is in a confirmed uptrend with aligned moving averages, strong relative strength, and proximity to highs. The HGM rating then adds a layer of fundamental validation, focusing on earnings and sales acceleration, margin improvement, and positive revisions. This dual approach helps traders and investors zero in on stocks that are leading both in price action and in business performance.
Microchip Technology Inc. (NASDAQ:MCHP) emerges as a candidate that checks many of these boxes, making it worth a closer look for those following this disciplined strategy.
Meeting the Trend Template
Microchip Technology (MCHP) currently satisfies nearly all of Minervini’s core technical criteria, which are designed to isolate stocks in a healthy Stage 2 uptrend.
Moving Average Alignment: The stock is trading above its 50-day SMA ($92.28), 150-day SMA ($76.27), and 200-day SMA ($73.02). The 50-day SMA is above both the 150-day and 200-day SMAs, and the 150-day SMA is also above the 200-day SMA. All three key moving averages (50, 150, and 200-day) are currently trending upward, confirming long-term momentum.
52-Week Range: At a current price of $92.48, MCHP is approximately 90% above its 52-week low of $48.52 and within 13% of its 52-week high of $105.91. This satisfies the rules of being at least 30% above the low and within 25% of the high, placing it in the ideal zone for capturing continued strength.
Relative Strength: The ChartMill Relative Strength (CRS) score stands at 87.67, meaning it has outperformed nearly 88% of all stocks in the database. This is well above the minimum threshold of 70, meeting Minervini’s preference for leaders in the top quintile.
The stock’s long-term trend is positive, while the short-term trend is currently neutral. This suggests a consolidation phase, which often precedes the next leg higher.
High Growth Momentum Fundamentals
Minervini’s strategy doesn’t stop at the chart. The strongest moves are often backed by companies that are accelerating their earnings and sales. MCHP’s recent numbers show a clear inflection point after a period of decline.
Earnings Acceleration: The most recent quarter (Q2Q) showed EPS growth of 418.2% compared to the same quarter last year. This follows a previous quarter growth of 120%. After several quarters of negative comparisons (Q-2: -23.9%, Q-3: -49.1%), this represents a strong turnaround. Analysts expect this momentum to continue, with the next quarter estimated at 161.9% growth.
Revenue Growth: Sales growth (Q2Q) came in at 35.1%, a sharp acceleration from the previous quarter’s 15.6%. This positive trend is a critical component of the HGM model. The last three full fiscal years show a recovery from -42.3% growth to the current trailing twelve months growth of 7.1%.
Profitability & Revisions: Profit margins have improved significantly, from 2.94% in the prior quarter to 8.88% in the most recent quarter. The company has beaten EPS estimates in all of the last four quarters, with an average beat of 7.4%. Upward revisions from analysts are also strong, with next year’s EPS estimates revised up by 20.9% over the last three months.
This combination of accelerating earnings, rising sales, expanding margins, and strong analyst revisions fits the profile of a stock that may be entering a new growth phase.
Technical Assessment & Setup Quality
According to the ChartMill Technical Report, MCHP scores a 7 out of 10 for both its Technical Rating and its Setup Quality Rating. This indicates the stock is technically solid and currently forming a consolidation pattern. The report identifies a support zone around $87.91 to $88.98 and a resistance level near $92.92. A breakout above this resistance could provide an entry point, with a logical stop-loss placed below the support zone to manage risk.
Screening for More Opportunities
This analysis is just one example of how to combine Minervini’s trend rules with high growth fundamentals. For a continuously updated list of stocks that meet these combined criteria, you can access the live screen used for this selection. Click here to view more results from the ‘High Growth Momentum + Trend Template’ screen and explore other potential setups.
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 consider your financial situation before making any trading decisions.
Read full article here »