Arista Networks Inc (NYSE:ANET) Fits the CAN SLIM Investing Strategy with Strong Growth and Market Leadership

The CAN SLIM investing strategy, created by William O’Neil, blends fundamental and technical analysis to spot high-growth stocks with solid momentum. The approach looks for companies showing faster earnings and sales growth, significant institutional backing, and strong price performance, while also factoring in broader market conditions. Stocks matching these traits are frequently market leaders with potential for additional gains.

A stock currently aligning with the CAN SLIM model is Arista Networks Inc (NYSE:ANET). The firm, which offers cloud networking solutions, displays multiple traits that fit O’Neil’s strategy. Here’s how ANET matches the key CAN SLIM criteria:

C – Current Quarterly Earnings and Sales Growth

• EPS Growth (Q2Q): 39.05%
• Revenue Growth (Q2Q): 30.43%
  CAN SLIM highlights strong recent quarterly results, preferably with increasing growth. ANET’s earnings and sales growth easily surpass the suggested minimums (20% for EPS, 25% for revenue) by O’Neil. This points to effective execution in its sector.

A – Annual Earnings Growth

• 3-Year EPS CAGR: 46.94%
  The method prefers firms with steady yearly earnings growth. ANET’s three-year compounded annual growth rate greatly exceeds the 25% target, showing lasting profitability and operational strength.

N – New Products, Management, or Highs

• Trading Near 52-Week High: Yes
• Innovation in Cloud Networking: Arista’s emphasis on AI-driven networking and subscription-based software fits CAN SLIM’s liking for firms tapping into new trends. The stock’s closeness to its 52-week high signals market approval of its growth prospects.

S – Supply and Demand

• Debt/Equity Ratio: 0 (No Debt)
• Strong Liquidity Metrics: Current Ratio of 3.33
  Minimal debt and high liquidity lower financial risk, and ANET’s debt-free balance sheet is uncommon in its field. The stock’s average daily volume (~9.7M shares) provides good liquidity, another plus for institutional interest.

L – Market Leadership

• Relative Strength (CRS): 92.1
  CAN SLIM favors stocks beating the broader market. ANET’s relative strength score shows it outperforms 92% of all stocks—a sign of market leadership.

I – Institutional Sponsorship

• Institutional Ownership: 69.86%
  While not extremely high, institutional ownership is notable, reflecting professional investor trust. The lack of overcrowding (below O’Neil’s 85% warning level) allows for more institutional buying.

M – Market Direction

• S&P 500 Trend: Positive (Long- and Short-Term)
  The overall market’s upward trend aligns with CAN SLIM’s idea that top stocks do better in supportive conditions.

Technical and Fundamental Summary

• Technical Rating: 10/10 – Strong upward trend, high relative strength, and trading near 52-week highs. (Full TA Report)
• Fundamental Rating: 7/10 – Outstanding profitability (ROE: 29.83%) and growth, though valuation is high. (Full FA Report)

Conclusion

Arista Networks demonstrates many CAN SLIM qualities: strong earnings momentum, sector leadership, and institutional support, all in a rising market. While its valuation is steep, the company’s growth path and technical performance make it an attractive option for growth-focused investors.

For more CAN SLIM-aligned stocks, check our pre-configured screener here.

Disclaimer: This analysis is not investment advice. Do your own research or consult a financial advisor before making investment choices.