Investors looking for high-growth market leaders have long used the CAN SLIM methodology, a systematic approach made popular by William O'Neil. This method mixes fundamental and technical analysis to find companies with solid earnings momentum, better relative strength, and institutional support, all while the general market trend is positive. The aim is to locate stocks that are not only fundamentally healthy but are also being acknowledged and bought by the market.
A recent filter using main CAN SLIM rules has identified ALAMOS GOLD INC-CLASS A (NYSE:AGI) as a possible candidate. The Canadian gold producer seems to fit a number of the system's numerical standards, justifying more attention from investors focused on growth.
Fitting the CAN SLIM Fundamentals
The "C" and "A" in CAN SLIM focus on current and annual earnings power. The method looks for companies showing major and frequently speeding profit growth.
- Current Quarterly Earnings (C): AGI shows a very high 116% year-over-year earnings per share (EPS) growth for the latest quarter, well above the common CAN SLIM minimum of 18-25%. This points to strong recent operational momentum.
- Annual Earnings Increases (A): The company's three-year EPS compound annual growth rate (CAGR) is about 70.6%, which is unusually solid and matches the strategy's hunt for "big growth."
- Return on Equity (A): With a Return on Equity (ROE) of 13.33%, AGI shows effective use of shareholder capital, going beyond the 10% minimum often used in filters and ranking it with the best in its field.
The "S" rule about supply and demand includes an emphasis on a solid balance sheet. AGI does well here with a very low debt-to-equity ratio of about 0.065, showing a very careful capital structure with almost no debt load, a good signal of financial stability and reduced risk.
Institutional Sponsorship and Market Leadership
The "I" and "L" rules concentrate on whether informed money is seeing the stock and how it acts compared to the wider market.
- Institutional Sponsorship (I): Institutional ownership is noted at 73.06%, which is under the 85% limit often used in filters. This indicates potential for more institutional purchases, which can give continued upward support to the stock price as more funds learn about it.
- Leader or Laggard (L): This is where AGI especially is notable. The stock has a ChartMill Relative Strength (CRS) rating of 93.73, meaning it has done better than almost 94% of all stocks over the last year. This outstanding relative strength is a key part of the CAN SLIM idea, spotting true market leaders.
Technical and Fundamental Summary
An examination of AGI's separate reports gives a unified view. The technical analysis report gives the stock a full rating of 10 out of 10, seeing both its short-term and long-term trends are good. The stock is trading near the top of its 52-week range and has displayed steady, solid performance across many time periods.
The fundamental analysis report gives a rating of 6 out of 10. It points out AGI's very good profitability measures and excellent balance sheet but notes some small issues about financial health liquidity ratios. The valuation seems fair compared to its industry, particularly when considering its high growth rate.
The "M" – Market Direction
The last part of CAN SLIM is the general market direction. The method suggests investing money mainly during verified market uptrends. At this time, the S&P 500 shows a positive short-term trend, which offers a more supportive environment for following growth-focused ideas like AGI, based on the methodology's guidelines.
A Candidate for More Study
Based on the particular measures of the CAN SLIM filter, ALAMOS GOLD INC-CLASS A displays a notable profile. It shows very strong recent earnings growth, a solid multi-year growth history, better market-leading price performance, and a strong balance sheet, all main parts of the strategy. While its position as a gold producer may be different from the usual technology or consumer growth stock, its numerical measures match closely with the system's filters.
For investors wanting to examine other stocks that pass similar CAN SLIM-based filters, you can run the filter yourself via this link: O'Neill CANSLIM High Growth Screen.
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Disclaimer: This article is for information only and is not investment advice, a suggestion, or an offer to buy or sell any security. The CAN SLIM method involves risk, and past results of a filtering method or a specific stock do not guarantee future outcomes. Investors should do their own complete research and due diligence, thinking about their personal financial situation and risk tolerance, before making any investment choices.
