In the many strategies used by growth investors, the CANSLIM method, created by William O'Neil, is notable for its structured mix of fundamental and technical study. This approach aims to find market leaders with good earnings momentum, solid financials, and institutional support, while also highlighting the need for positive price movement and general market condition. A recent filter using this strict structure has identified BEL FUSE INC-CL B (NASDAQ:BELFB) as a firm deserving more attention from investors focused on growth.
A Good Fundamental Base
Fundamentally, CANSLIM requires solid and increasing earnings growth, and BEL FUSE meets this important requirement. The firm's latest quarterly report displays strong momentum, a central part of the "C" in CANSLIM.
- Quarterly Earnings Growth (Q2Q): +111.1%
- Quarterly Sales Growth (Q2Q): +44.8%
This rise in profit is not an isolated incident. The "A" in CANSLIM asks for steady yearly earnings gains, and BEL FUSE's three-year EPS compound annual growth rate of 48.6% is much higher than the method's usual standards. Also, the firm shows effective use of shareholder money with a Return on Equity (ROE) of 15.2%, which is above the 10% level often used in CANSLIM filters to confirm quality. A look at the firm's full fundamental analysis shows an overall score of 7/10, with good results in profit measures.
Market Position and Institutional Support
The "L" and "I" of the CANSLIM method concentrate on finding market leaders with appropriate institutional interest. BEL FUSE shows clear leading traits, as shown by its high relative strength (CRS) of 98.01. This indicates the stock's price performance has been better than 98% of the wider market, a sign of the strong momentum CANSLIM looks for. While leadership is important, the method also prefers a reasonable level of institutional ownership. With institutional ownership at 45%, BEL FUSE is significantly below the 85% maximum often used in filters. This indicates potential for more institutional purchases, which could support upward movement in the stock price, instead of being too heavily owned and possibly inactive.
Technical Condition and Market Position
CANSLIM is not only a fundamental strategy, it needs supporting technical condition. BEL FUSE's technical view is particularly strong, receiving a top score of 10/10 in its technical analysis report. The stock is in a confirmed upward trend on both short and long-term views and is now trading close to its 52-week high, meeting the "new highs" part of the "N" rule. This notable price movement, happening while the S&P 500's short-term trend is also positive, fits with the method's final "M" rule of following the general market direction.
Price and Financial Condition Factors
While the growth and momentum rules are strongly satisfied, a complete view needs examining other elements. The firm keeps a reasonable debt-to-equity ratio of 0.53, which is within the careful limits preferred by the "S" (Supply and Demand) rule regarding financial debt. From a price perspective, the stock trades at a P/E ratio that matches its high growth, which is common for firms in a strong momentum stage. Investors should compare the higher price to the shown growth rates and future earnings possibility.
A Subject for More Study
Based on the main CANSLIM filters used, BEL FUSE shows a notable outline for growth investors. It displays the effective mix of increasing fundamental results and leading technical position that the strategy tries to find.
For investors wanting to find other firms that match this structured growth model, you can review the set O'Neill CANSLIM High Growth screen.
Disclaimer: This article is for information only and does not form investment advice, a suggestion, or an offer to buy or sell any security. The data shown is from sources thought to be dependable, but its correctness cannot be assured. Investors should do their own complete study and assessment, thinking about their personal financial situation and risk comfort, before making any investment choices.
