Hunting breakout candidates: accelerating earnings growth confirmed by price strength near the 52-week high, automated across the entire market.
Save the strategy and StockScorer checks its rules for you every day. You'll get a heads-up whenever a stock crosses the upper or lower score threshold.
Once enough history is available, the backtest chart for this strategy will appear here.
Every stock runs through the same disclosed rules. The points add up to a score, traceable down to the individual rule.
Each rule checks a metric against a threshold, for example ROE above 15 %.
You decide how much each rule counts: from +1 to +3 or −1 to −3.
The sum is the score. Above the upper threshold: a high match with the profile.
These terms describe only the match with the criteria, not a recommendation to buy or sell.
The latest quarter must be more than 25% above the prior-year quarter: growth now, not someday.
The long-term earnings trend (5-year CAGR above 25%) separates flashes in the pan from real growth machines.
A price near the 52-week high and relative strength above +15% show institutional money moving in.
Rising prices on rising volume, otherwise the breakout lacks conviction.
For aggressive investors with high volatility tolerance and the discipline to sell losers quickly. Momentum strategies live on rigorous risk management: the deduction for prices deep below the 52-week high is the built-in ripcord.
Growth Momentum looks for the most dynamic stocks in the market just before or during their breakout. The model is William O'Neil's CAN SLIM system, based on a study of the strongest price winners across several decades: explosive earnings growth in the latest quarter (C) and over years (A), a price near the 52-week high (N), rising trading volume (S) and market leadership in relative strength (L). The approach deliberately runs contrary to value investing: you buy strength expecting trends to continue, not weakness hoping for recovery.
Five criteria earn one point each: quarterly earnings growth above 25% versus the prior-year quarter (C), long-term earnings growth above 25% per year (A), a price at most 5% below the 52-week high (N), rising trading volume with positive 3-month performance (S) and a 6-month relative strength of more than +15% versus the market (L). If a stock trades more than 30% below its 52-week high, that costs 2 points: a broken trend disqualifies.
The upper threshold is 3 points for large caps, 4 for mid caps and 5 for small caps: a small cap therefore has to meet all five criteria at once. That is intentional: the most explosive breakouts happen in smaller names, but that is also where the noise is loudest.
C: Current earnings, earnings growth in the latest quarter > 25% YoY (+1).
A: Annual earnings, earnings growth over 5 years > 25% p.a. (+1).
N: New highs, price at most 5% below the 52-week high (+1).
S: Supply & demand, 3-month volume rising with a positive price (+1).
L: Leader, 6-month relative strength > +15% versus the market (+1). Price > 30% below the high: −2.
Documented deviations: long-term growth is measured via the 5-year CAGR (original: 3 years), market leadership via 6-month relative strength instead of RSI(14), and volume via the 3-month trend instead of the 50-day average. The original criteria I (institutional buyers) and M (market direction) are dropped for lack of data. Thresholds are lowered accordingly by the two dropped points.
In the backtest, the quarterly-earnings and volume criteria are neutralised for lack of historical data points; 52-week high, relative strength and long-term growth are reconstructed historically. The rule-coverage panel in the backtest scales the thresholds proportionally and discloses this transparently.
For trend-oriented investors who accept shorter holding periods and manage positions rigorously by score: momentum rewards discipline, not patience.