Why Mark Minervini may look into ROKU INC (NASDAQ:ROKU)

Growth investors are looking for stocks showing high revenue and EPS growth. We will have a look here to see if ROKU INC (NASDAQ:ROKU) is suited for growth investing. Investors should of course do their own research, but we spotted ROKU INC showing up in our Minervini growth screen, so it may be worth spending some more time on it.

Minervini Trend Template Analysis.

The Minervini Trend Template is a set of technical criteria designed to identify stocks in strong uptrends. We can check all the boxes for ROKU:

• ✔ Relative Strength is above 70.
• ✔ Current price is within 25% of it's 52-week high.
• ✔ Current price is at least 30% above it's 52-week low.
• ✔ The current price is above the 50-, 150- and 200-day SMA price line.
• ✔ The SMA(200) is trending upwards.
• ✔ The SMA(150) is above the SMA(200)
• ✔ The SMA(50) is above the SMA(150) and the SMA(200)

Growth Examination for ROKU

ChartMill assigns a High Growth Momentum Rating (HGM) to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth and profitability elements, including EPS and revenue growth, accelleration, surprises and revisions. In the case of ROKU, the assigned 5 reflects its growth potential:

Earnings Momentum

• ROKU has demonstrated consistent growth in its earnings per share (EPS) from one quarter to another (Q2Q), with a 56.36% increase. This indicates improving financial performance and the company's effective management of its operations.
• ROKU has experienced 82.27% growth in EPS over a 12 month period, demonstrating its ability to generate sustained and positive earnings momentum.
• The recent q2q revenue growth of 22.0% of ROKU showcases the company's ability to generate increasing revenue in a short period, reflecting its positive growth trajectory.
• The sales growth of ROKU is accelerating: the current Q2Q growth of 22.0% is above the previous quarter Q2Q growth of 16.47%. Sales momentum and acceleration are key for high growth systems.
• Sales growth accelerated for 2 quarters in a row.
• ROKU has a strong history of beating EPS estimates in the last 4 quarters, signaling its ability to consistently exceed market expectations. This indicates the company's strong financial performance and its potential for creating shareholder value.

Financial Strength & Profitability

• ROKU has shown positive growth in its operating margin over the past year, indicating improved operational efficiency. This growth highlights the company's ability to effectively manage costs and maximize profitability.
• ROKU has shown positive growth in its free cash flow (FCF) over the past year, indicating improved cash generation and financial strength. This growth highlights the company's ability to effectively manage its cash flows and generate surplus funds.
• A Debt/Equity ratio of 0.0 highlights ROKU's commitment to maintaining financial stability.

Market Strength & Institutional Confidence

• The ownership composition of ROKU reflects a balanced investor ecosystem, with institutional shareholders owning 84.57%. This indicates a broader market participation and potential for increased trading liquidity.
• The Relative Strength (RS) of ROKU has been consistently solid, with a current 87.01 rating. This highlights the stock's ability to exhibit sustained price strength and signifies its competitive advantage.

Why is ROKU a setup?

ChartMill assigns a Setup Rating to every stock to determine the degree of consolidation. This rating, ranging from 0 to 10, is updated daily and evaluates various short-term technical indicators. ROKU currently holds a 3 as its setup rating, suggesting a particular level of consolidation in the stock.

ROKU has an average technical rating and it also does not offer a high quality setup at the moment. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first.

For an up to date full technical analysis you can check the technical report of ROKU

Final Thoughts

More ideas for high growth momentum stocks can be found on ChartMill in our High Growth Momentum + Trend Template screen.

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.