Is NASDAQ:MPWR on the Verge of a Major Breakout as a Strong Growth Stock?

Last update: Oct 6, 2023

In this article we will dive into MONOLITHIC POWER SYSTEMS INC (NASDAQ:MPWR) as a possible candidate for growth investing. Investors should always do their own research, but we noticed MONOLITHIC POWER SYSTEMS INC showing up in our strong growth, ready to breakout screen, which makes it worth to investigate a bit more.

Growth Assessment of NASDAQ:MPWR

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NASDAQ:MPWR has earned a 8 for growth:

The Earnings Per Share has grown by an impressive 26.72% over the past year.
MPWR shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 33.54% yearly.
The Revenue has grown by 23.28% in the past year. This is a very strong growth!
The Revenue has been growing by 30.67% on average over the past years. This is a very strong growth!
The Earnings Per Share is expected to grow by 14.40% on average over the next years. This is quite good.
Based on estimates for the next years, MPWR will show a quite strong growth in Revenue. The Revenue will grow by 14.47% on average per year.

Assessing Health Metrics for NASDAQ:MPWR

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NASDAQ:MPWR has earned a 9 out of 10:

An Altman-Z score of 36.83 indicates that MPWR is not in any danger for bankruptcy at the moment.
MPWR has a better Altman-Z score (36.83) than 97.17% of its industry peers.
MPWR has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
MPWR has a Current Ratio of 6.51. This indicates that MPWR is financially healthy and has no problem in meeting its short term obligations.
MPWR has a Current ratio of 6.51. This is amongst the best in the industry. MPWR outperforms 87.74% of its industry peers.
A Quick Ratio of 4.80 indicates that MPWR has no problem at all paying its short term obligations.
MPWR has a better Quick ratio (4.80) than 79.25% of its industry peers.

Evaluating Profitability: NASDAQ:MPWR

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NASDAQ:MPWR, the assigned 9 is a significant indicator of profitability:

MPWR's Return On Assets of 20.39% is amongst the best of the industry. MPWR outperforms 91.51% of its industry peers.
MPWR has a Return On Equity of 24.62%. This is amongst the best in the industry. MPWR outperforms 81.13% of its industry peers.
With an excellent Return On Invested Capital value of 23.20%, MPWR belongs to the best of the industry, outperforming 91.51% of the companies in the same industry.
MPWR had an Average Return On Invested Capital over the past 3 years of 18.74%. This is significantly above the industry average of 12.96%.
The last Return On Invested Capital (23.20%) for MPWR is above the 3 year average (18.74%), which is a sign of increasing profitability.
The Profit Margin of MPWR (24.50%) is better than 82.08% of its industry peers.
MPWR's Profit Margin has improved in the last couple of years.
The Operating Margin of MPWR (28.72%) is better than 83.96% of its industry peers.
MPWR's Operating Margin has improved in the last couple of years.
The Gross Margin of MPWR (57.65%) is better than 74.53% of its industry peers.

Looking at the Setup

ChartMill also assign a Setup Rating to every stock. With this score it is determined to what extend the stock has been trading in a range in the recent days and weeks. This score also ranges from 0 to 10 and is updated daily. The setup score evaluates various short term technical indicators. NASDAQ:MPWR scores a 8 out of 10:

Although the technical rating is bad, MPWR does present a nice setup opportunity. We see reduced volatility while prices have been consolidating in the most recent period. There is a resistance zone just above the current price starting at 460.41. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 450.20, a Stop Loss order could be placed below this zone.

Every day, new Strong Growth stocks can be found on ChartMill in our Strong Growth screener.

For an up to date full fundamental analysis you can check the fundamental report of MPWR

Our latest full technical report of MPWR contains the most current technical analsysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.