Identifying promising growth stocks often involves a dual approach: pinpointing companies with strong underlying business momentum and ensuring their stock charts reflect a healthy, established uptrend. One systematic method that combines these elements is inspired by the work of renowned trader Mark Minervini. His strategy emphasizes finding stocks in a clear "Stage 2" advance, supported by solid earnings and sales growth, before they make their most significant price moves. This involves applying a strict technical checklist, the Trend Template, to confirm the trend's strength, coupled with fundamental screens to verify accelerating corporate performance. A stock that passes both sets of criteria presents a strong case for growth-oriented investors.
Rigel Pharmaceuticals Inc (NASDAQ:RIGL) emerges as a current candidate that appears to align with this growth-and-trend philosophy. The biotechnology firm, focused on therapies for hematologic disorders and cancer, shows the technical and fundamental hallmarks often sought in such a strategy.
Assessing the Technical Trend
The cornerstone of the initial screening is the Minervini Trend Template, a set of rules designed to filter for stocks in a confirmed and strong uptrend. The template ensures an investor is aligning with the prevailing momentum rather than trying to catch a falling knife. A review of RIGL's chart and key metrics suggests it meets these strict technical conditions:
- Price Above Key Averages: The stock's last price of $42.83 trades well above its rising 50-day ($40.06), 150-day ($31.62), and 200-day ($28.37) simple moving averages (SMAs). This alignment indicates sustained buying pressure across short, intermediate, and long-term timeframes.
- Moving Average Alignment: The 50-day SMA resides above both the 150-day and 200-day SMAs, while the 150-day SMA is above the 200-day SMA. This sequential bullish stacking of averages is a classic sign of a healthy Stage 2 uptrend.
- Proximity to Highs: RIGL's current price sits within 25% of its 52-week high of $52.24, a requirement that focuses on strength rather than cheapness. Furthermore, the price is more than 30% above its 52-week low of $15.50, demonstrating a significant recovery trend.
- Superior Relative Strength: With a ChartMill Relative Strength (CRS) score of 97.69, RIGL outperforms nearly 98% of all stocks in the market over the past year. High relative strength is a critical filter, as it identifies market leaders that tend to outperform during bullish phases.
Evaluating the Growth Momentum
While a strong chart is essential, it must be supported by improving business fundamentals to have lasting power. The "High Growth Momentum" aspect of the screen looks for evidence of accelerating financial performance. RIGL's recent results show several positive catalysts:
- Explosive Earnings Growth: The company has reported staggering year-over-year earnings per share (EPS) growth. The most recent quarter saw EPS surge by 108.6%, following an even larger 5,566.7% increase in the prior quarter. This pattern of large acceleration is a strong fundamental catalyst.
- Consistent Earnings Surprises: RIGL has beaten analyst EPS estimates in each of the last four quarters, with an average surprise of 188.1%. Repeated positive surprises often lead to upward revisions in future estimates and increased institutional interest.
- Solid Sales Expansion: Revenue growth is also strong, with the last quarter up 25.6% year-over-year. This follows quarters of even higher growth (176.0% and 80.6%), indicating sustained commercial traction for its products, including TAVALISSE and REZLIDHIA.
- Improving Profitability: The company's profit margin in the last reported quarter was 40.2%, showing an ability to translate higher sales into significant earnings. This marks a substantial improvement and points to increasing operational efficiency.
Technical Health and Setup Summary
Beyond the specific Trend Template criteria, RIGL's overall technical health is sound. ChartMill's proprietary Technical Rating awards the stock a high score of 9 out of 10, reflecting its strong long-term uptrend and superior market-relative performance. The analysis notes the stock is trading in the upper part of its yearly range and maintains a positive long-term trend despite recent consolidation.
The accompanying Setup Rating is 6, indicating the stock is in a period of consolidation after its prior advance. The technical report identifies a clear resistance zone between $43.00 and $44.65. A decisive breakout above this area could signal the resumption of the uptrend and provide a potential entry point, with support levels near $40.77 offering a logical area for initial risk management. You can review the full, detailed technical analysis for RIGL here.
A Candidate for Further Analysis
Rigel Pharmaceuticals presents a case where strong fundamental momentum, characterized by explosive earnings growth and expanding sales, is mirrored by a technically sound chart that meets a strict trend-following template. This confluence makes RIGL a stock worthy of closer examination for investors focused on high-growth opportunities within established uptrends.
Discover More Potential Candidates The methodology that highlighted RIGL can be applied systematically to the broader market. If you are interested in finding other stocks that currently meet similar criteria of strong technical trends and high growth momentum, you can explore the pre-configured screen here.
Disclaimer: This article is for informational and educational purposes only. It is not intended as investment advice, nor does it constitute a recommendation to buy, sell, or hold any security. The analysis is based on data provided and certain methodological frameworks; past performance is not indicative of future results. Always conduct your own due diligence and consider consulting with a qualified financial advisor before making any investment decisions.