Combining strong earnings momentum with a well-defined technical pattern is a reliable way to screen for potentially actionable trading opportunities. The strategy is straightforward: look for companies that not only demonstrate accelerating growth and positive earnings surprises—hallmarks of the high growth momentum approach—but also exhibit a clear technical setup, such as a price consolidation near resistance. This dual-filter approach helps identify stocks where the fundamental story is strong and the chart is preparing for a potential breakout.
Avnet Inc (NASDAQ:AVT) is an interesting candidate that passes this screen. The company, a major distributor of electronic components, has recently shown a significant shift in its earnings trajectory, earning it a solid High Growth Momentum Rating of 6 out of 10. This score is driven by several key factors that align perfectly with the strategy's focus on near-term momentum.
Why the Growth Profile Fits
The core of the High Growth Momentum rating lies in recent earnings acceleration and positive revisions. Avnet’s data illustrates this clearly:
- Recent Earnings Acceleration: After a period of declining year-over-year EPS comparisons (e.g., -33.6% three quarters ago), the trend has dramatically reversed. Last quarter, EPS grew by 76.2% year-over-year, a sharp acceleration from the 20.7% growth seen in the prior quarter.
- Forward Momentum: This trend is expected to continue, with estimates for the next quarter pointing to a massive 120.8% year-over-year EPS increase. This suggests the turnaround is gaining traction.
- Consistent Surprises: The company has beaten both EPS and revenue estimates in each of the last four quarters, with an average EPS surprise of 7.4%. This track record of execution builds confidence.
- Positive Revisions: Analysts have been raising their forecasts. Over the last three months, the average EPS estimate for the next fiscal year has been revised upward by nearly 13%.
- Sales Growth: Revenue is also accelerating. After nearly flat growth last year, the most recent quarter saw a 33.9% jump in sales, with the next quarter estimated to show a similar 35.2% increase.
For a high growth momentum investor, these figures check essential boxes: a clear inflection point in earnings, accelerating sales, and strong confirmation from both actual results and analyst expectations.
The Technical Setup Provides the Entry Signal
A strong fundamental story alone isn't enough; a poor entry point can ruin the risk/reward profile of any trade. This is where Avnet's technical picture becomes compelling. You can see the detailed analysis in the full AVN technical report, which highlights a setup rating of 8 out of 10.
The technical picture shows a stock with a positive long-term trend, outperforming 90% of all stocks over the past year. However, it has recently pulled back and is now consolidating. The setup summary points to a resistance zone just above the current price, between $91.47 and $92.93. A move above this zone could signal the start of a new leg higher. Concurrently, there is a support zone near $85.08, providing a clear and logical place for a stop-loss order. This range-bound behavior before a potential breakout is the classic setup pattern that growth investors look for to time their entry.
Finding More Candidates
Avnet is just one example. The strategy of combining a High Growth Momentum Rating with a strong technical setup is a repeatable process. To see a regularly updated list of similar stocks that pass these same criteria, you can run the High Growth Momentum Breakout Setups screen here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own analysis and consider your financial situation before making any trading decisions.
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Avnet Inc (NASDAQ:AVT) Shows High Growth Momentum and Breakout Setup
Combining strong earnings momentum with a well-defined technical pattern is a reliable way to screen for potentially actionable trading opportunities. The strategy is straightforward: look for companies that not only demonstrate accelerating growth and positive earnings surprises—hallmarks of the high growth momentum approach—but also exhibit a clear technical setup, such as a price consolidation near resistance. This dual-filter approach helps identify stocks where the fundamental story is strong and the chart is preparing for a potential breakout.
Avnet Inc (NASDAQ:AVT) is an interesting candidate that passes this screen. The company, a major distributor of electronic components, has recently shown a significant shift in its earnings trajectory, earning it a solid High Growth Momentum Rating of 6 out of 10. This score is driven by several key factors that align perfectly with the strategy's focus on near-term momentum.
Why the Growth Profile Fits
The core of the High Growth Momentum rating lies in recent earnings acceleration and positive revisions. Avnet’s data illustrates this clearly:
For a high growth momentum investor, these figures check essential boxes: a clear inflection point in earnings, accelerating sales, and strong confirmation from both actual results and analyst expectations.
The Technical Setup Provides the Entry Signal
A strong fundamental story alone isn't enough; a poor entry point can ruin the risk/reward profile of any trade. This is where Avnet's technical picture becomes compelling. You can see the detailed analysis in the full AVN technical report, which highlights a setup rating of 8 out of 10.
The technical picture shows a stock with a positive long-term trend, outperforming 90% of all stocks over the past year. However, it has recently pulled back and is now consolidating. The setup summary points to a resistance zone just above the current price, between $91.47 and $92.93. A move above this zone could signal the start of a new leg higher. Concurrently, there is a support zone near $85.08, providing a clear and logical place for a stop-loss order. This range-bound behavior before a potential breakout is the classic setup pattern that growth investors look for to time their entry.
Finding More Candidates
Avnet is just one example. The strategy of combining a High Growth Momentum Rating with a strong technical setup is a repeatable process. To see a regularly updated list of similar stocks that pass these same criteria, you can run the High Growth Momentum Breakout Setups screen here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own analysis and consider your financial situation before making any trading decisions.
Read full article here »