Combining the search for high-growth momentum stocks with technical breakout patterns can be a productive way to narrow the field. The idea is to identify companies that not only show accelerating earnings and strong sales growth but are also forming a favorable technical setup, suggesting a potential entry point is near. By screening for a High Growth Momentum (HGM) rating above 4, a Technical Rating above 7, and a Setup Rating above 7, we aim to find stocks where the fundamental momentum is supported by a constructive chart pattern. One stock that currently meets these criteria is REMITLY GLOBAL INC (NASDAQ:RELY).
The High Growth Momentum Case for RELY
The ChartMill High Growth Momentum rating is designed to pinpoint stocks with the kind of short-term earnings momentum favored in strategies like CANSLIM and Minervini. Remitly’s score of 6 out of 10 is built on a foundation of exceptional fundamental metrics, which matter deeply for this strategy.
- Explosive Earnings Growth: The company’s earnings per share (EPS) over the last twelve months (TTM) have grown by 1,733% compared to the prior year. This growth is accelerating in the most recent quarter, with a 360% year-over-year increase, following a 733% increase in the prior quarter. For a high-growth momentum strategy, accelerating quarterly earnings is a key checkmark.
- Consistent Surprises: The company has beaten analyst EPS estimates in each of the last four quarters, with an average surprise of over 500%. This consistent ability to outperform expectations is a strong indicator of business momentum.
- Margin Expansion and Cash Flow: Profit margins are expanding, rising from 1.59% three quarters ago to 10.8% in the most recent quarter. Free cash flow has also grown by nearly 297% over the past year, another positive sign that the business is becoming more efficient and profitable.
- Positive Revisions: Analysts have been raising their estimates, with the average next-year EPS estimate rising by 25.6% over the last three months. This collective optimism is a core component of the HGM rating.
These numbers paint a picture of a company in a clear phase of fundamental acceleration. The Revenue 1Y (TTM) growth of 27.3% provides the top-line cover that growth investors look for, while the accelerating earnings growth provides the real momentum.
A Clean Technical Setup
While the fundamentals are compelling, growth investors need a reasonable entry point. A stock can have perfect earnings but still be a poor buy if it is already extended. This is where the technical analysis from the ChartMill Technical report adds significant value.
- Technical Strength: RELY earns a 9 out of 10 on the ChartMill Technical Rating. The report notes a positive long-term and short-term trend, with prices trading above and rising all four major moving averages (20, 50, 100, and 200-day SMAs).
- Setup Quality: Crucially, it also scores a 7 out of 10 on the Setup Rating. This indicates the stock is currently consolidating after its recent advance, forming a bull flag pattern. This is exactly the type of pattern growth investors look for to potentially enter a stock.
- Defined Risk Zone: The report identifies a resistance zone just above the current price (around $23.85 to $24.28) and a support zone just below ($23.10 to $23.76). This creates a defined area for a potential breakout and a clear level for a stop-loss, an essential component of risk management.
Connecting the Dots
The screen we ran was designed to find stocks where strong fundamental momentum and a sound technical setup converge. RELY fits this profile well. The earnings are growing at an accelerating pace, margins are expanding, and analysts are raising their expectations. Simultaneously, the stock is not wildly extended but is instead forming a constructive consolidation pattern, with a high technical rating confirming its overall health.
This combination does not guarantee future results, but it aligns with the core tenets of high-growth momentum investing: find a leader with strong earnings, and only consider it when the chart provides a reasonable entry point with a clear risk threshold.
For investors looking to explore more stocks that pass this same rigorous screen, you can find the current list by running the High Growth Momentum Breakout Setups screen to see the latest results.
Disclaimer: This article is for informational and educational purposes only. It does not constitute investment advice. Please conduct your own analysis before making any trading decisions.
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REMITLY GLOBAL (NASDAQ:RELY) (RELY) Shows High Growth Momentum With Bull Flag Breakout Setup
Combining the search for high-growth momentum stocks with technical breakout patterns can be a productive way to narrow the field. The idea is to identify companies that not only show accelerating earnings and strong sales growth but are also forming a favorable technical setup, suggesting a potential entry point is near. By screening for a High Growth Momentum (HGM) rating above 4, a Technical Rating above 7, and a Setup Rating above 7, we aim to find stocks where the fundamental momentum is supported by a constructive chart pattern. One stock that currently meets these criteria is REMITLY GLOBAL INC (NASDAQ:RELY).
The High Growth Momentum Case for RELY
The ChartMill High Growth Momentum rating is designed to pinpoint stocks with the kind of short-term earnings momentum favored in strategies like CANSLIM and Minervini. Remitly’s score of 6 out of 10 is built on a foundation of exceptional fundamental metrics, which matter deeply for this strategy.
These numbers paint a picture of a company in a clear phase of fundamental acceleration. The Revenue 1Y (TTM) growth of 27.3% provides the top-line cover that growth investors look for, while the accelerating earnings growth provides the real momentum.
A Clean Technical Setup
While the fundamentals are compelling, growth investors need a reasonable entry point. A stock can have perfect earnings but still be a poor buy if it is already extended. This is where the technical analysis from the ChartMill Technical report adds significant value.
Connecting the Dots
The screen we ran was designed to find stocks where strong fundamental momentum and a sound technical setup converge. RELY fits this profile well. The earnings are growing at an accelerating pace, margins are expanding, and analysts are raising their expectations. Simultaneously, the stock is not wildly extended but is instead forming a constructive consolidation pattern, with a high technical rating confirming its overall health.
This combination does not guarantee future results, but it aligns with the core tenets of high-growth momentum investing: find a leader with strong earnings, and only consider it when the chart provides a reasonable entry point with a clear risk threshold.
For investors looking to explore more stocks that pass this same rigorous screen, you can find the current list by running the High Growth Momentum Breakout Setups screen to see the latest results.
Disclaimer: This article is for informational and educational purposes only. It does not constitute investment advice. Please conduct your own analysis before making any trading decisions.
Read full article here »