AXON ENTERPRISE INC (NASDAQ:AXON) Fits Key CAN SLIM Criteria with Strong Earnings Growth and Market Leadership

The CAN SLIM investing strategy, created by William O'Neil, merges fundamental and technical analysis to spot high-growth stocks with solid momentum. This approach targets firms showing rising earnings and sales growth, institutional backing, and strong performance compared to peers, while also considering overall market trends. The goal is to find leading stocks breaking out of tight trading ranges during favorable market conditions, aiming for substantial gains while keeping risk in check.

AXON ENTERPRISE INC (NASDAQ:AXON) appears to meet multiple CAN SLIM standards:

C – Current Quarterly Earnings & Sales Growth

• EPS Growth (Q2Q): 76.7%
• Revenue Growth (Q2Q): 32.6%
  The firm’s latest quarterly results far surpass CAN SLIM’s typical 20-25% growth benchmark, signaling strong business performance. Rising earnings growth is a key trait of CAN SLIM stocks, as it points to increasing profitability and market interest.

A – Annual Earnings Growth

• 3-Year EPS CAGR: 36.3%
  AXON’s steady earnings growth exceeds the 25% minimum, showing reliable operational success. This matches CAN SLIM’s emphasis on firms with a history of sustained profitability, not just temporary spikes.

N – New Products, Management, or Highs

As a developer of modern public safety technology, including body cameras, cloud-based evidence systems, and Tasers, AXON operates in a sector with ongoing demand. While not directly measurable, its advancements in law enforcement tools fit CAN SLIM’s preference for innovative firms.

S – Supply & Demand

• Debt/Equity Ratio: 0.63
  A reasonable debt level allows financial flexibility, though CAN SLIM investors often favor lower leverage. The stock’s liquidity (average daily volume ~785K shares) ensures institutional involvement, another important factor.

L – Market Leadership

• Relative Strength (CRS): 92.5
  AXON beats 92.5% of all stocks over the past year, a crucial CAN SLIM measure. Stocks with high relative strength often remain leaders during upward market trends, as institutional investors prefer momentum.

I – Institutional Sponsorship

• Institutional Ownership: 82%
  Though slightly below the 85% threshold used in this screen, this level shows notable institutional interest. CAN SLIM favors stocks with increasing, but not excessive, institutional ownership, as it indicates validation without overcrowding.

M – Market Direction

With the S&P 500 in a positive trend both long- and short-term, the broader market aligns with CAN SLIM’s buy conditions. AXON’s recent trading near highs may present an entry opportunity if it breaks out with higher volume.

Technical & Fundamental Summary

• Technical Rating (8/10): AXON displays a strong long-term uptrend, but recent price swings suggest waiting for a clearer pattern (Full TA Report).
• Fundamental Rating (5/10): Neutral profitability and valuation (P/E ~106) are balanced by impressive growth metrics (Full FA Report).

Conclusion

AXON fits several CAN SLIM criteria, especially in earnings growth, relative strength, and industry role. However, its high valuation and recent price volatility call for careful consideration. Investors might watch for a breakout above resistance (~$750) with strong volume to confirm momentum.

For additional CAN SLIM-aligned stocks, check our preset O’Neill CANSLIM High Growth Screen.

Disclaimer: This analysis is not investment advice. Conduct thorough research or consult a financial advisor before making decisions.