For investors looking for a systematic way to find high-growth market leaders, the CAN SLIM method, created by William O'Neil, is a foundational strategy. It joins careful fundamental study with important technical signs to find stocks with solid earnings momentum, support from large institutions, and leading traits, all inside a positive market setting. The system’s name lists its main parts: Current quarterly earnings speed, Annual earnings growth, New products or price highs, Supply and demand forces, Leadership position, Institutional backing, and the general Market trend.
A recent filter using these ideas has identified Arista Networks Inc (NYSE:ANET) as a candidate for more review. The cloud networking company seems to match several key CAN SLIM requirements, indicating a profile growth-focused investors might find interesting.
Matching the CAN SLIM Requirements
A look at Arista Networks' financials shows how it compares to the number-based standards of the CAN SLIM system.
- Current Quarterly Earnings & Sales (C): The strategy requires solid, and ideally speeding up, recent quarterly results. Arista fits this with a quarterly earnings per share (EPS) increase of 25.0% and sales increase of 27.5% against the same quarter last year, easily passing the common minimum levels of 20-25%.
- Annual Earnings Growth (A): CAN SLIM seeks a clear record of growth. Arista displays a strong 3-year EPS compound annual growth rate (CAGR) of about 46.9%, well above the 25% minimum. Also, its Return on Equity (ROE) of 28.2% shows very good use of shareholder money, passing the system's liking for a number over 10-17%.
- Supply & Demand / Financial Health (S): A strong balance sheet is preferred. Arista does very well here with a Debt-to-Equity ratio of 0.0, showing no debt and putting it in the best group of its industry for financial soundness.
- Leader or Laggard (L): The system focuses on market leaders. Arista’s relative strength (CRS) of 79.35 means it is doing better than almost 80% of all stocks, a clear mark of leading momentum that fits the need to concentrate on the best-performing equities.
- Institutional Sponsorship (I): While ownership by large institutions is needed, it should not be so large that all possible buying is done. Arista’s institutional ownership of 70.2% is under a common filter level of 85%, hinting there is still space for more institutional buying.
Fundamental and Technical Overview
A summary review of Arista’s separate analysis reports gives background for its CAN SLIM match.
From a fundamental view, Arista gets a solid rating. Its profit measures are excellent, with top industry margins and returns on capital. Financial health is sound, marked by high liquidity and no debt. Growth is a notable feature, with strong past rates in both revenue and earnings, and good future estimates. The main note is on price, where common measures like the P/E ratio seem high, though this could be reasonable given its better growth and quality profile. You can see the complete fundamental analysis report for ANET here.
Technically, the view is varied but shows good basic trends. The long-term trend is still positive, and the stock is priced in the upper part of its 52-week range. Yet, its nearer-term trend is neutral, and recent price movement has been a bit unsteady, missing a clear, good consolidation shape that often gives the best entry chances for CAN SLIM investors. The present market condition, with a positive short-term trend for the S&P 500, meets the "M" for Market Direction, giving a generally helpful setting. The full technical analysis report for ANET is found here.
Investment Points
For investors using the CAN SLIM method, Arista Networks shows an interesting case built on its fundamental positives. It meets the important marks for strong earnings growth, yearly increase, high profitability, financial soundness, and market-leading relative strength. These are the exact traits the system is made to find.
However, a strict CAN SLIM method also includes timing. While the fundamental needs are mostly met, the technical picture is now rated as middling, suggesting the stock may not be leaving a clear "well-made base" at this exact time. Also, its high price needs belief in the ongoing high growth path. Investors would usually watch for a helpful price consolidation with matching volume on any move to a new high before thinking about an entry, always following clear stop-loss rules to handle risk.
Finding Other Possible Leaders
Arista Networks shows the kind of firm a CAN SLIM filter can find. For investors wanting to run this filter themselves to find other possible candidates, the ready-made setup is available to use.
You can open and adjust this CAN SLIM stock filter to see current market results through this link.
Disclaimer: This article is for information and learning only. It is not investment advice, a suggestion, or an offer to buy or sell any security. The CAN SLIM method includes risk of loss, and investors should do their own complete study and think about their personal money situation and risk comfort before making any investment choices. Past results do not show future outcomes.
