Investors looking to join strict technical rules with fundamental growth patterns frequently use methods like the one made famous by Mark Minervini. His plan, called Specific Entry Point Analysis (SEPA), methodically finds stocks showing both notable price movements and quickening business results. The aim is to find market front-runners near the start of their large gains by using a fixed checklist, the Trend Template, for technical condition, and then adding rules for profit and revenue expansion. This two-step method tries to seize stocks where notable price movement is backed by better company results, possibly giving good risk and reward arrangements.
ROYAL GOLD INC (NASDAQ:RGLD) works as a top precious metals stream and royalty company. Located in Denver, it keeps a varied set of interests on mining properties around the globe, giving investors contact with gold and other metals without the working risks of mining. The company's plan creates income from metal output at its partner mines, giving a distinct position on material costs and mining industry condition.
A Clear Technical Pattern
A main idea of the Minervini plan is to trade following the main pattern, looking only at stocks showing definite and continued force. The Trend Template gives the technical plan, and Royal Gold now fits its main rules, indicating a solid Stage 2 rise.
- Moving Average Order: The stock's price is trading higher than all its main moving averages (50-day, 150-day, and 200-day), and these averages are arranged in a positive order, the 50-day over the 150-day, which is over the 200-day. This order confirms buyers have command across several time periods.
- Nearness to Highs: The present price is much higher than the 52-week low and not far from its 52-week high. This shows the stock is taking part in the wider upward pattern instead of coming back from large drops.
- Better Relative Performance: Maybe most importantly, Royal Gold has a ChartMill Relative Strength (CRS) score of 95.17. This means it has done better than about 95% of the market during the last year. Minervini states that real market front-runners show high relative performance, as large investor money moves into the top performers first.
This technical view is not random; it shows continued need for the stock. The plan suggests that such an arrangement often comes before or goes along with important price moves, as it removes weaker stocks stuck in resting or falling shapes.
Business Foundations Supporting the Movement
While a good chart is necessary, the Minervini view states that the largest gainers are pushed by fundamental quickening. The "High Growth Momentum" part of the search looks for companies showing clear gain in their financial results. Royal Gold's recent numbers show this kind of positive movement.
- Profit Strength: The company has reported notable year-over-year earnings per share (EPS) gain, with the latest quarter up more than 40%. More significantly, this is part of a series, with the two earlier quarters showing gain of about 45% and 66%, in turn. This series of quickening quarterly EPS gain is a sign of the fundamental movement the plan looks for.
- Forecast Changes: Experts have been increasing their predictions, with the average guess for next year's earnings moved higher by almost 3% during the last three months. Positive changes often point to growing belief in a company's future and can be a reason for more price gain.
- Working Effectiveness: Even with some quarterly change, the company's yearly profit margin has grown notably, going from about 39.5% two years ago to over 46% in the last financial year. Gaining margins suggest price control and working effectiveness, main signs of lasting growth companies.
This mix of strong and quickening profits, together with positive expert feeling, gives the fundamental "support" that can maintain a technical rise. The plan states that without this basic business force, even the best-looking chart may not have lasting force.
Technical Condition and Present Position
A look at the detailed technical study report for RGLD confirms its force while giving background for possible entry. The stock gets a complete ChartMill Technical Rating of 10, showing very good condition across both short and long-term patterns. Its long-term pattern is called positive, matching well with the wider S&P 500's present positive short-term direction.
However, the report also mentions a low Setup Rating of 1. This shows that after its recent notable rise, the stock may be stretched in the short term and is not now making a tight, low-change resting shape, like the Volatility Contraction Pattern (VCP) Minervini likes for exact entries. For investors following this method, this suggests waiting: while RGLD fits as a strong pattern choice, the best low-risk entry point may come later, after a time of rest. You can see the full technical study here: RGLD Technical Analysis Report.
Locating Like Possibilities
Royal Gold gives a clear example of a stock that fits with the ideas of pattern-following and growth movement investing. Its chart shows front-runner signs, while its foundations show the quickening that can push continued better performance.
For investors wanting to use this strict search method to find other possible choices, the set search that found RGLD is ready to use. You can find more stocks that fit the joined 'High Growth Momentum + Trend Template' rules by using this search link.
Disclaimer: This article is for information and learning only. It is not advice to buy or sell any security. The study is based on present information and a certain investment method, and past results do not show future results. Always do your own study and think about talking with a skilled financial advisor before making any investment choices.
