For investors looking for a methodical way to find leading companies with high growth, the CAN SLIM method, made famous by William O'Neil, is a foundational plan. It joins careful study of company finances with important chart-based signals to find stocks with solid profit trends, support from large investors, and better price action, best bought when the overall market is healthy. A recent filter using main CAN SLIM rules has identified Anglogold Ashanti PLC (NYSE:AU) as a stock that deserves more examination.
Checking AU Against CAN SLIM Rules
The CAN SLIM letters define clear, measurable steps a stock must pass. Here is how Anglogold Ashanti measures up against several of the system's crucial checks on company health:
-
Current Quarterly Earnings & Sales (The "C"): CAN SLIM looks for strong, frequently increasing, growth in the latest quarter. AU shows notable power here, with earnings per share (EPS) for the last quarter rising 179.4% year-over-year and sales growth increasing by 75.3%. These numbers are much higher than the usual minimum levels of 20-25% growth, showing a strong short-term expansion of profit and revenue.
-
Annual Earnings Increases (The "A"): The plan needs a record of solid yearly growth, confirming a company's performance is not just for one quarter. AU displays a strong history, with its EPS increasing at a compound annual rate of about 110.9% over the last three years. This is much higher than the common minimum need of 25-50% growth. Also, the company's Return on Equity (ROE) of 32.6% is above the 10% level, indicating very effective use of investor money.
-
Supply, Demand, and Financial Health (The "S"): CAN SLIM prefers companies with good financial statements. AU's debt-to-equity ratio is a low 0.27, under the screen's limit of 2.0. This small amount of debt shows the company is not weighed down by borrowing, offering financial room and lower risk, a good sign about the "supply" of its stock and general company condition.
-
Leader or Laggard (The "L"): A central idea of the system is to buy market leaders, not weaker performers. This is judged by relative strength (RS), which scores a stock's price action against the wider market. AU has a strong RS rating of 96.31, meaning it has done better than over 96% of all stocks in the past year. This firmly places it as a leader, a required feature for CAN SLIM investors.
-
Institutional Sponsorship (The "I"): While some ownership by large investors is needed to give trading volume and confirmation, too much ownership can reduce future buying. AU's institutional ownership is 76.3%, below the 85% maximum used in the screen. This points to a good degree of professional investor attention while allowing for more institutional buying.
Financial and Chart-Based Overview
A look at AU's wider fundamental analysis shows a company with major positives. It receives high scores for profitability, with very good margins and returns on capital, and for financial soundness, showing strong liquidity and debt ratios. The stock price assessment seems fair, particularly compared to others in its industry. However, analysts forecast a possible deceleration, with predictions for slightly lower EPS and revenue growth in the next year, a detail for investors to watch.
The technical analysis offers a less clear view. The longer-term price direction is still up, supported by the stock's large 160% increase over the last twelve months. Still, the short-term direction has turned down, with the price declining noticeably from recent peaks and moving with higher instability. This highlights the "M" in CAN SLIM, Market Direction. With the wider S&P 500 showing a down longer-term trend, the present situation calls for care, matching O'Neil's guidance to be choosy during market declines.
Conclusion
Anglogold Ashanti PLC makes a strong argument when assessed using the CAN SLIM growth investing system. It meets with force the main financial rules of current quarterly growth, yearly earnings gains, and high profitability. Its market-leading relative strength and moderate institutional ownership also meet key filters. The main points for a CAN SLIM investor would be the forecasted profit deceleration and, more critically, the present down short-term price trend within a difficult wider market. This indicates that while AU has many traits of a CAN SLIM candidate, choosing any possible point to buy would need close watch for a shift in market direction and better price steadiness.
For investors wanting to see other stocks that pass similar CAN SLIM-based filters, you can see the full screening results here.
Disclaimer: This article is for information only and is not financial advice, a support, or a suggestion to buy, sell, or hold any investment. Investing has risk, including the possible loss of the original amount invested. Always do your own complete research and think about your personal money situation and risk comfort before making any investment choices.