Investors looking to find stocks with the possibility for major growth frequently use systematic methods that join technical strength with fundamental momentum. One example is the method made popular by Mark Minervini, which concentrates on locating stocks already in strong uptrends, aided by improving business fundamentals. This method uses a fixed "Trend Template" to sort for technical condition and focuses on high relative strength and nearness to new highs. When this technical filter is combined with a "High Growth Momentum" (HGM) rating, it finds companies that are not only trending positively on charts but are also showing outstanding earnings and sales growth, forming a strong mix for momentum investors.
ATRenew Inc. (NYSE:RERE) stands as a present candidate that meets this two-part screen. The China-based company, which runs a platform for recycling and reselling consumer electronics like smartphones, seems to be showing the exact traits that growth-oriented, trend-following methods try to identify.
Matching the Minervini Trend Template
The center of Minervini's method is his Trend Template, a group of firm technical rules made to confirm a stock is in a clear, continuing uptrend. ATRenew's chart presently matches these important checks:
- Price Above Key Moving Averages: The stock is trading well above its rising 50-day ($4.34), 150-day ($3.88), and 200-day ($3.60) simple moving averages (SMAs). This order confirms buyers are in charge across short, intermediate, and long-term periods.
- Moving Average Order: The 50-day SMA is above both the 150-day and 200-day SMAs, and the 150-day SMA is above the 200-day SMA. This positive, ordered layering of averages points to a solid and structured uptrend.
- Nearness to Highs: With a present price of $5.38 and a 52-week high of $5.67, RERE is trading within 5% of its yearly top. Minervini's idea is to buy strength, not weakness, and leading stocks often make their largest advances near new highs.
- Major Recovery: The stock price is presently 169% above its 52-week low of $2.00, showing a strong recovery trend and notable momentum.
- Strong Relative Strength: Maybe most importantly, RERE has a ChartMill Relative Strength (CRS) rating of 94.74. This means it has done better than nearly 95% of all stocks in the market over the past year, a sign of true market leadership that Minervini strongly focuses on.
This technical view meets the Trend Template's goal: to remove weak, consolidating, or falling stocks and concentrate only on those with a high chance of continuing their upward path.
Showing High Growth Momentum
While a positive chart is necessary, Minervini's method needs the price movement to be confirmed by fundamental improvement. The "High Growth Momentum" part of the screen makes sure the company's financial engine is working well. ATRenew's recent results show several signs of fast growth:
- Earnings Growth Jump: The company's trailing twelve-month (TTM) earnings per share (EPS) has risen by 441% year-over-year. This type of sharp profit increase is exactly what draws institutional buying and supports continued price advances.
- Steady Quarterly Momentum: Looking at recent quarters shows a sequence of solid, consecutive growth:
- Last Quarter (Q2Q): EPS grew 21.6%
- Previous Quarter (Q-1): EPS grew 28.1%
- Two Quarters Ago (Q-2): EPS grew 269.2%
- Solid Revenue Growth: Top-line growth remains positive, with TTM revenue up 27.9% and the last quarter's sales rising 27.1% year-over-year. This shows demand for its recycling platform is increasing steadily.
- Getting Better Profitability: The company's profit margin has shown consecutive improvement over the last three reported quarters (0.92% -> 1.44% -> 1.77%), pointing to not just growth, but more efficient, higher-quality growth.
This mix of fast earnings growth, good sales growth, and better margins gives the fundamental "reason" that Minervini looks for, the proof that strong price performance is supported by a truly improving business.
Technical Condition and Setup Evaluation
A look at the detailed ChartMill Technical Analysis Report for RERE gives a full view. The report gives the stock a perfect technical rating of 10 out of 10, noting its steady positive trends across both short and long-term periods and its position as a top performer within the Specialty Retail industry. It confirms the stock is trading near a new 52-week high and shows high relative strength.
However, the report also gives a note of warning for immediate entry, giving a setup rating of 3. It notes that while the technicals are very good, recent price movement has been unstable, and the stock is trading near the top of its recent range. For a Minervini-style trader, this indicates the stock is a confirmed leader to monitor carefully, but a good, lower-risk entry point might need waiting for a time of consolidation or a volatility contraction pattern (VCP) to form, giving a clearer support level for a stop-loss.
Locating Comparable Chances
ATRenew Inc. offers a strong example of a stock that fits a disciplined growth and momentum method. Its strong uptrend meets strict technical filters, while its fast earnings growth provides the fundamental reason for the price movement. For investors wanting to look for other companies showing this mix of technical strength and fundamental momentum, the screen that found RERE can be a useful beginning point.
You can view the present results of this "High Growth Momentum + Trend Template" screen for yourself here.
Disclaimer: This article is for informational and educational purposes only. It is not a recommendation to buy or sell any security. The analysis is based on data provided and does not constitute investment advice. Investors should conduct their own research and consider their individual financial situation and risk tolerance before making any investment decisions. Please read our full disclaimer here.
