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Two factors that could move the Fresenius Se amp; Co Kgaa (ETR:FRE) share price

Ben Hobson
·2-min read

The Fresenius Se & Co Kgaa (ETR:FRE) share price is currently trading at 43.97. But given the volatile market conditions and uncertain economic outlook, the question now is what the future holds for it.

To try and predict where the Fresenius Se & Co Kgaa price will head next, it's worth knowing its strengths and potential weaknesses. The good news is that it stacks up well against some important financial and technical measures...

Specifically, it's a large-cap share with strong exposure to two of the most influential drivers of investment returns in the stock market: high quality and strong momentum.

Quality and momentum are highly prized among investors. Good quality stocks are more likely to be resilient, cash-generating businesses that can compound investment returns over time. Strong momentum in price and earnings is a pointer to stocks with positive trends with the potential to continue.

To understand why quality and momentum are so important in a share like Fresenius Se & Co Kgaa, here's a close-up view:

GET MORE DATA-DRIVEN INSIGHTS INTO ETR:FRE »

Why quality matters...

When it comes to stock analysis, company quality tends to show up in high profitability and strong industry-leading margins. These kinds of firms are stable, growing and often have accelerating sales and earnings. They also have strong and improving financial histories with no signs of accountancy or bankruptcy risk.

One of the stand out quality metrics for Fresenius Se & Co Kgaa is its 5-year Return on Capital Employed, which is a solid 10.8%. Good, double-digit ROCEs are a pointer to companies that can grow very profitably.

...and why momentum is so powerful

Positive momentum trends show up in share prices and earnings growth. You can find the clues in stocks that are trading close to their 52 week high prices and outperforming the market. They’ll often be beating broker estimates and getting forecast upgrades and recommendation changes.

This is true at Fresenius Se & Co Kgaa, where the share price has seen a 3.14% return relative to the market over the past 12 months. Market volatility and economic uncertainty can be a major drag on momentum, but previously strong stocks can be quick to recover when confidence returns.

In summary, good quality and momentum are pointers to some of the best stocks on the strongest uptrends. This combination of factors can be a clue to finding shares that can compound investment returns over many years.

In good times, these shares can become expensive to buy. But in volatile markets, there may be chances to buy them at knock-down prices.

Find the strongest shares in the stock market

Finding good quality stocks with strong momentum behind them is a strategy used by some of the world's most successful investors. If you want to find more shares that meet these rules, you can see a comprehensive list on Stockopedia's StockRanks page.