RIGEL PHARMACEUTICALS INC (NASDAQ:RIGL) Stands Out as a Top Growth Stock Candidate

A systematic method for growth investing can help investors find companies with good possibilities for expansion and value increase. One such system comes from Louis Navellier's "The Little Book That Makes You Rich," which lists eight particular rules for choosing excellent growth stocks. These rules center on earnings revisions, surprises, sales growth, margin improvement, cash flow health, earnings growth, earnings momentum, and return on equity. When used with a stock screening tool, this method can identify companies that display several positive fundamental traits at the same time.

RIGEL PHARMACEUTICALS INC (NASDAQ:RIGL) appears as a notable candidate when measured against Navellier's growth rules. The biotechnology company, which creates therapies for hematologic disorders and cancer, displays several traits that match the systematic method described in the growth investing system.

Earnings Revisions and Surprises

The company displays notable health in areas Navellier points to as important early signs. Analyst earnings revisions have gone up by 307% over the past three months, indicating increasing confidence in the company's near-term future. This matches the system's focus on positive earnings revisions as signs that analysts have solid reasons to improve their estimates.

RIGL's earnings surprise history is especially significant:

• All four of the last quarterly reports were better than analyst predictions
• The average earnings beat was 440%
• This steady pattern of beating estimates could lead to further estimate improvements

Growth Measurements

The company displays very strong growth across several areas that Navellier's system focuses on. Sales growth shows notable momentum with quarterly revenue going up 176% year-over-year and trailing twelve-month revenue increasing 106%. This quickening in sales growth is precisely what growth investors look for, as increasing revenue streams often come before notable stock price increases.

Earnings growth measurements are similarly notable:

• Quarterly EPS growth of 5,567% year-over-year
• Trailing twelve-month EPS growth of 729%
• These numbers greatly pass the system's growth limits

Profitability and Cash Flow

Operating margin improvement represents another main part of the growth plan, and RIGL does very well here with a 664% gain in operating margins over the past year. This shows the company is increasing sales while managing costs well, creating significant operating efficiency.

The company's cash flow generation has changed significantly:

• Free cash flow growth of 235% over the past year
• Good conversion of earnings into real cash
• Better financial ability for future growth projects

Earnings Momentum and Returns

The earnings momentum rule, which needs current growth to be higher than earlier periods, is clearly satisfied given the large increase from 85% quarterly growth a year ago to the present 5,567% number. This major gain indicates the company has reached a turning point in its business path.

Return on equity is at 119%, greatly passing the system's 10% limit and showing very efficient use of shareholder money. This excellent profitability measurement supports the company's growth picture.

Fundamental Evaluation

According to ChartMill's detailed study, RIGL gets an overall fundamental rating of 6 out of 10. The review points out several main strong points:

• Excellent profitability ratios including return on assets of 47% and return on invested capital of 69%
• Good margin picture with operating margins of 39% and profit margins of 37%
• Very good value with P/E ratio of 5.5 compared to industry average of 62
• Healthy growth path in both past and expected measurements

The complete fundamental study report gives more detailed views into RIGL's financial condition and competitive place within the biotechnology industry.

Investment Points

While the company displays several traits that match growth investing rules, investors should be aware of some areas needing review. The Altman-Z score indicates some financial health questions, though this is somewhat typical in the biotechnology sector where companies often put growth ahead of immediate profitability. The company's liquidity ratios, while acceptable, are lower than industry counterparts.

The present market situation, with both short-term and long-term S&P 500 patterns positive, could create good conditions for growth stocks showing these traits. However, biotechnology investments naturally involve regulatory and clinical development risks that must be carefully assessed.

For investors wanting to find other companies that meet these growth rules, the Little Book strategy screen is openly available and can be adjusted based on personal risk comfort and investment goals.

This article presents information for educational purposes only and does not constitute investment advice, recommendation, or endorsement of any security. Investors should conduct their own research and consult with financial advisors before making investment decisions. Past performance does not guarantee future results, and investing in equities carries risk of loss.