High growth momentum investing typically requires a stock to demonstrate accelerating earnings and sales, expanding margins, positive analyst revisions, and a history of beating estimates. Combining those fundamental traits with a stock that is also forming a technical consolidation or base pattern can be particularly attractive, as it suggests the company is fundamentally strong and may be building energy for its next move higher. The following analysis looks at one such candidate that emerged from a screen targeting both a strong ChartMill High Growth Momentum Rating and a favorable technical setup.
Monolithic Power Systems Inc (NASDAQ:MPWR) is a designer and marketer of integrated power semiconductor solutions used across computing, automotive, industrial, communications, and consumer markets. The stock recently earned a ChartMill High Growth Momentum Rating of 6 out of 10, a solid score that places it in the range where interesting growth candidates tend to appear. This rating considers a variety of factors including year-over-year earnings and sales growth, quarter-over-quarter acceleration, free cash flow trends, profit margin expansion, earnings surprises, and analyst estimate revisions.
Fundamental Growth Drivers
The fundamental picture for MPWR shows several characteristics that growth investors look for. The company’s trailing twelve-month EPS stands at $18.83, with EPS growth of 22.6% over the past year and 25.8% in the most recent full fiscal year. The acceleration pattern is evident: EPS growth on a quarter-over-quarter basis has improved from 16.5% two quarters ago to 26.2% in the latest reported quarter. The forward estimate for the next quarter points to even stronger growth of 41.8%, suggesting analysts expect the acceleration to continue.
Revenue growth tells a similar story. The company has posted top-line growth of 23.9% over the last twelve months, with the most recent quarter showing a 26.1% increase versus the same period last year. That figure is up from 20.8% in the prior quarter. Analysts project next quarter’s revenue growth at 38.5%, reinforcing the positive momentum. Margins are also healthy, with a net profit margin of 24% in the latest quarter, well above year-ago levels. The company has beaten revenue estimates in three of the last four quarters and EPS estimates in two, while analysts have revised next year’s EPS and revenue estimates upward by 11.5% and 9.3% respectively over the past three months.
Technical Setup and Rating
Beyond the fundamentals, the technical picture is also worth noting. The stock carries a ChartMill Technical Rating of 7 out of 10, which indicates a generally solid technical health with a positive long-term trend. The long-term trend is confirmed positive, and the stock’s yearly performance ranks it better than 91% of all stocks in the database. Notably, the stock is currently forming a base pattern, earning a Setup Rating of 7 out of 10 as well. This means prices have been consolidating and volatility has decreased, creating a potential breakout setup.
According to the detailed technical analysis report, the stock has a resistance zone ranging from $1,383 to $1,395, followed by another resistance level near $1,661. Support sits in the $1,335 to $1,347 range. The current price of $1,383 is just below the first resistance zone, which could serve as an actionable entry point if the stock breaks through on volume. A stop-loss order could logically be placed below the support zone near $1,335.
Why This Combination Matters
The screen that flagged MPWR required a Setup Rating above 7, a Technical Rating above 7, and a High Growth Momentum Rating above 4. This combination is useful because it ensures a stock not only has the fundamental earnings and sales momentum that growth investors seek, but also shows a favorable technical pattern where a clear entry and risk management plan can be established. A stock can have outstanding growth numbers, but if it is overextended or in a poor technical position, entry timing becomes difficult. Conversely, a stock with a perfect chart may lack the fundamental catalyst to sustain a move higher. MPWR scores reasonably well on both fronts, making it a candidate worth monitoring.
For investors looking to run similar scans or find additional candidates with this profile, the same screen can be accessed and customized via this link: High Growth Momentum Breakout Setups Screen. The screen combines the High Growth Momentum Rating with the Technical and Setup Ratings to help identify stocks that are growing strongly and setting up technically.
This article is for informational purposes only and does not constitute investment advice. Always conduct your own research and consider your risk tolerance before making trading decisions.
Read full article here »
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Monolithic Power Systems Inc (NASDAQ:MPWR) Shows High Growth Momentum With Promising Breakout Setup
High growth momentum investing typically requires a stock to demonstrate accelerating earnings and sales, expanding margins, positive analyst revisions, and a history of beating estimates. Combining those fundamental traits with a stock that is also forming a technical consolidation or base pattern can be particularly attractive, as it suggests the company is fundamentally strong and may be building energy for its next move higher. The following analysis looks at one such candidate that emerged from a screen targeting both a strong ChartMill High Growth Momentum Rating and a favorable technical setup.
Monolithic Power Systems Inc (NASDAQ:MPWR) is a designer and marketer of integrated power semiconductor solutions used across computing, automotive, industrial, communications, and consumer markets. The stock recently earned a ChartMill High Growth Momentum Rating of 6 out of 10, a solid score that places it in the range where interesting growth candidates tend to appear. This rating considers a variety of factors including year-over-year earnings and sales growth, quarter-over-quarter acceleration, free cash flow trends, profit margin expansion, earnings surprises, and analyst estimate revisions.
Fundamental Growth Drivers
The fundamental picture for MPWR shows several characteristics that growth investors look for. The company’s trailing twelve-month EPS stands at $18.83, with EPS growth of 22.6% over the past year and 25.8% in the most recent full fiscal year. The acceleration pattern is evident: EPS growth on a quarter-over-quarter basis has improved from 16.5% two quarters ago to 26.2% in the latest reported quarter. The forward estimate for the next quarter points to even stronger growth of 41.8%, suggesting analysts expect the acceleration to continue.
Revenue growth tells a similar story. The company has posted top-line growth of 23.9% over the last twelve months, with the most recent quarter showing a 26.1% increase versus the same period last year. That figure is up from 20.8% in the prior quarter. Analysts project next quarter’s revenue growth at 38.5%, reinforcing the positive momentum. Margins are also healthy, with a net profit margin of 24% in the latest quarter, well above year-ago levels. The company has beaten revenue estimates in three of the last four quarters and EPS estimates in two, while analysts have revised next year’s EPS and revenue estimates upward by 11.5% and 9.3% respectively over the past three months.
Technical Setup and Rating
Beyond the fundamentals, the technical picture is also worth noting. The stock carries a ChartMill Technical Rating of 7 out of 10, which indicates a generally solid technical health with a positive long-term trend. The long-term trend is confirmed positive, and the stock’s yearly performance ranks it better than 91% of all stocks in the database. Notably, the stock is currently forming a base pattern, earning a Setup Rating of 7 out of 10 as well. This means prices have been consolidating and volatility has decreased, creating a potential breakout setup.
According to the detailed technical analysis report, the stock has a resistance zone ranging from $1,383 to $1,395, followed by another resistance level near $1,661. Support sits in the $1,335 to $1,347 range. The current price of $1,383 is just below the first resistance zone, which could serve as an actionable entry point if the stock breaks through on volume. A stop-loss order could logically be placed below the support zone near $1,335.
Why This Combination Matters
The screen that flagged MPWR required a Setup Rating above 7, a Technical Rating above 7, and a High Growth Momentum Rating above 4. This combination is useful because it ensures a stock not only has the fundamental earnings and sales momentum that growth investors seek, but also shows a favorable technical pattern where a clear entry and risk management plan can be established. A stock can have outstanding growth numbers, but if it is overextended or in a poor technical position, entry timing becomes difficult. Conversely, a stock with a perfect chart may lack the fundamental catalyst to sustain a move higher. MPWR scores reasonably well on both fronts, making it a candidate worth monitoring.
For investors looking to run similar scans or find additional candidates with this profile, the same screen can be accessed and customized via this link: High Growth Momentum Breakout Setups Screen. The screen combines the High Growth Momentum Rating with the Technical and Setup Ratings to help identify stocks that are growing strongly and setting up technically.
This article is for informational purposes only and does not constitute investment advice. Always conduct your own research and consider your risk tolerance before making trading decisions.
Read full article here »