High-growth momentum investing demands a specific combination of accelerating earnings, rising sales, and positive analyst revisions, while technical breakout setups require a stock to be in a clear uptrend and forming a consolidation pattern. By screening for a high ChartMill Technical Rating (TA Rating) of at least 7, a strong Setup Rating above 7, and a High Growth Momentum (HGM) Rating above 4, we isolate stocks that satisfy both the fundamental growth criteria and the technical timing conditions necessary for a potential breakout. This approach aims to identify stocks with strong earnings momentum that are also exhibiting the price consolidation needed for a clean entry.
Cognex Corp (NASDAQ:CGNX) is a candidate that emerged from this screening process, earning a TA Rating of 9, a Setup Rating of 7, and an HGM Rating of 6.
Why the Growth Metrics Matter
The HGM Rating of 6 places Cognex firmly in the area of high-growth stocks worthy of closer inspection. The score is built on several strong fundamental pillars that are critical for this strategy:
- Accelerating Earnings Growth: The company’s earnings per share (EPS) growth is demonstrating the acceleration pattern that growth investors prize. The most recent quarter saw EPS growth of 112.5% year-over-year, a significant jump from the previous quarter's 35% growth. This follows a pattern where growth has surged from 8.7% three quarters ago to 65% two quarters ago, clearly showing an upward trajectory.
- Consistent Sales Acceleration: Revenue is telling a similar story. The last quarter’s sales growth of 24.3% year-over-year is a clear acceleration from the 9.9% growth in the prior quarter and 4.1% growth three quarters ago. This top-line acceleration signals increasing demand for Cognex’s machine vision solutions.
- Estimate Beats and Revisions: The company has beaten EPS estimates in each of the last four quarters, with an average beat of over 13%. This consistent outperformance is a key component of the HGM rating. Furthermore, analysts have responded by raising their next-year EPS estimates by 18.4% over the last three months, a strong vote of confidence in the company’s future.
- Expanding Profitability and Cash Flow: The profit margin has improved significantly, rising from 10.9% three quarters ago to 12.9% in the most recent quarter. Free cash flow per share has also grown by 76.6% over the past year, providing the company with financial flexibility and indicating high-quality earnings.
The Technical Setup for a Breakout
While the growth fundamentals are strong, the technical setup is what provides a potential entry point. The full technical analysis report highlights why this stock is currently positioned for a possible move higher.
With a TA Rating of 9, Cognex is in excellent technical health. The long-term trend is positive, the stock has outperformed 92% of all other stocks over the past year, and it is currently trading in the upper portion of its 52-week range. The Setup Rating of 7 indicates a solid consolidation pattern is forming. According to the report, prices have been consolidating recently, volatility has decreased, and there is very little resistance above the current price, all of which are characteristics of a tightening base. A clear support zone exists between $62.63 and $63.23, providing a logical place for a stop-loss order.
Of course, a high setup rating identifies a stock that is ready to break out, but the actual move must still occur. The stock trades near the low end of its recent monthly range, which can be a neutral factor, but the underlying strength in its trend and the supporting growth metrics make it a name worth watching.
Finding More Setups Like CGNX
The combination of a high HGM Rating with a strong technical and setup rating is a useful filter. It allows investors to focus only on those stocks that are both fundamentally accelerating and technically coiled for a potential breakout. To see the latest list of stocks that match these exact criteria, you can run the screen for high growth momentum breakout setups yourself.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance and screen results are not indicative of future results. Always conduct your own analysis and consider your own risk tolerance before making any trading decisions.
Read full article here »
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Cognex Corp (NASDAQ:CGNX) Presents a High Growth Momentum Breakout Setup
High-growth momentum investing demands a specific combination of accelerating earnings, rising sales, and positive analyst revisions, while technical breakout setups require a stock to be in a clear uptrend and forming a consolidation pattern. By screening for a high ChartMill Technical Rating (TA Rating) of at least 7, a strong Setup Rating above 7, and a High Growth Momentum (HGM) Rating above 4, we isolate stocks that satisfy both the fundamental growth criteria and the technical timing conditions necessary for a potential breakout. This approach aims to identify stocks with strong earnings momentum that are also exhibiting the price consolidation needed for a clean entry.
Cognex Corp (NASDAQ:CGNX) is a candidate that emerged from this screening process, earning a TA Rating of 9, a Setup Rating of 7, and an HGM Rating of 6.
Why the Growth Metrics Matter
The HGM Rating of 6 places Cognex firmly in the area of high-growth stocks worthy of closer inspection. The score is built on several strong fundamental pillars that are critical for this strategy:
The Technical Setup for a Breakout
While the growth fundamentals are strong, the technical setup is what provides a potential entry point. The full technical analysis report highlights why this stock is currently positioned for a possible move higher.
With a TA Rating of 9, Cognex is in excellent technical health. The long-term trend is positive, the stock has outperformed 92% of all other stocks over the past year, and it is currently trading in the upper portion of its 52-week range. The Setup Rating of 7 indicates a solid consolidation pattern is forming. According to the report, prices have been consolidating recently, volatility has decreased, and there is very little resistance above the current price, all of which are characteristics of a tightening base. A clear support zone exists between $62.63 and $63.23, providing a logical place for a stop-loss order.
Of course, a high setup rating identifies a stock that is ready to break out, but the actual move must still occur. The stock trades near the low end of its recent monthly range, which can be a neutral factor, but the underlying strength in its trend and the supporting growth metrics make it a name worth watching.
Finding More Setups Like CGNX
The combination of a high HGM Rating with a strong technical and setup rating is a useful filter. It allows investors to focus only on those stocks that are both fundamentally accelerating and technically coiled for a potential breakout. To see the latest list of stocks that match these exact criteria, you can run the screen for high growth momentum breakout setups yourself.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance and screen results are not indicative of future results. Always conduct your own analysis and consider your own risk tolerance before making any trading decisions.
Read full article here »