RLX TECHNOLOGY INC-ADR (NYSE:RLX) Fits Minervini’s Trend Template with Strong Momentum and Growth Potential

RLX TECHNOLOGY INC-ADR (NYSE:RLX) has been recognized as a possible option for investors focused on high-growth momentum, based on Mark Minervini’s Trend Template method. This system blends technical and fundamental analysis to find stocks with strong upward trends, high performance compared to peers, and faster earnings growth, which are traits often seen in leading market performers. The method highlights stocks trading above important moving averages, displaying upward movement, and showing better revenue and profit numbers. RLX fits many of these points, making it worth a closer look.

Why RLX Matches the Minervini Trend Template

The Minervini Trend Template helps identify stocks in strong upward trends (Stage 2) while avoiding those in sideways movement (Stage 1) or downtrends (Stages 3 and 4). RLX meets several key technical requirements:

• Price Above Key Moving Averages:

  • The current price ($2.29) is higher than the 50-day SMA ($2.19), 150-day SMA ($2.11), and 200-day SMA ($2.03).
  • The 50-day SMA is above the 150-day and 200-day SMAs, showing positive alignment across time periods.
  • The 200-day SMA is moving up, indicating long-term stability.

• Relative Strength:

  • RLX has a ChartMill Relative Strength (CRS) score of 86.42, meaning it performs better than 86% of all stocks in price movement.
  • High relative strength is a key trait of top-performing stocks, a focus in Minervini’s approach.

• Price Near 52-Week High:

  • The stock is currently 14.9% below its 52-week high ($2.69) but 52.7% above its 52-week low ($1.50).
  • Stocks close to their highs often continue their upward movement, a quality Minervini values.

High Growth Momentum Fundamentals

Beyond technical factors, RLX shows improving growth numbers, important for high-growth investors:

• Revenue Growth:

  • TTM revenue growth of 48.8%, with the most recent quarter showing 46.5% year-over-year growth.
  • Earlier quarters also saw solid increases: 37.6% (Q-1), 51.6% (Q-2), and 65.9% (Q-3).

• Earnings Growth:

  • EPS growth of 20.1% in the latest quarter, following a mixed but improving trend (prior quarters: -41.5%, +37.0%, +173.3%).
  • Full-year EPS growth is 7.5%, a notable improvement from past years (-63.3% in FY-1, -24.3% in FY-2).

• Profit Margins:

  • Latest quarter profit margin of 27.5%, up from 15.0% in the previous quarter, showing better efficiency.
  • Free cash flow growth jumped 1,194.8% year-over-year, reflecting strong cash generation.

Technical Analysis Summary

ChartMill’s technical report gives RLX a Technical Rating of 7/10 and a Setup Rating of 8/10, suggesting a favorable pattern with potential for a breakout. Key points:

• Support Levels: Strong support areas at $2.26-$2.29 and $2.18-$2.22, offering clear stop-loss zones.
• Resistance: Near-term resistance at $2.47-$2.50, with a break above possibly leading to further gains.
• Recent Action: The stock has shown a pocket pivot signal, a positive volume and price pattern.

For more details on the technicals, see the full technical analysis report here.

Conclusion

RLX TECHNOLOGY INC-ADR stands out for both trend-focused and high-growth investors. Its fit with Minervini’s Trend Template criteria—strong moving averages, high relative strength, and closeness to 52-week highs—points to technical stability. At the same time, faster revenue and earnings growth, along with wider margins, support its fundamental strength.

For investors looking for similar high-growth momentum stocks, find more options using the High Growth Momentum + Trend Template screen.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Always conduct your own research and consider risk management strategies before trading.