VITA COCO CO INC/THE (NASDAQ:COCO) Displays Strong CAN SLIM Investment Traits

The CAN SLIM investment strategy, created by William O'Neil, joins fundamental and technical analysis to find high-growth market leaders. This methodical process assesses companies using seven main factors represented by the acronym CAN SLIM, concentrating on earnings speed, yearly growth patterns, new products or services, supply-demand forces, market leadership, institutional backing, and the general market direction. Investors applying this process look for companies showing solid quarterly and yearly earnings growth while displaying technical health via relative price performance.

Recent Performance and Growth Metrics

VITA COCO CO INC/THE (NASDAQ:COCO) displays notable growth traits that match several CAN SLIM factors. The company's latest quarterly report indicates a marked speed-up in both earnings and revenue:

• Quarterly EPS growth of 25% year-over-year
• Quarterly revenue growth of 37.17% year-over-year
• Three-year EPS compound annual growth rate of 39.19%

These numbers easily pass the CAN SLIM minimums of 20-25% for quarterly earnings growth and 25-50% for yearly earnings gains. The quickening revenue growth is especially significant as it points to rising market demand for the company's coconut water products and other beverage items.

Profitability and Financial Health

The company's fundamental health reaches beyond revenue growth to solid profitability figures and financial soundness:

• Return on Equity of 21.36%, much higher than the 10% minimum requirement
• No debt on the balance sheet, leading to a debt-to-equity ratio of 0
• Good liquidity position with current ratio of 3.43 and quick ratio of 2.75
• High Altman-Z score of 15.04 suggesting very low bankruptcy risk

These figures meet the CAN SLIM focus on companies with good yearly earnings gains and stable financial bases. The outstanding ROE puts COCO in the top group of its industry, while the absence of debt offers operational freedom and lessens financial danger.

Technical Strength and Market Position

From a technical viewpoint, COCO shows a number of traits preferred by CAN SLIM investors:

• Relative strength rating of 90.29, showing it performs better than 90% of all stocks
• Both short-term and long-term patterns are favorable
• Trading in the higher part of its 52-week range
• Good institutional ownership at 73.17%, under the 85% limit

The high relative strength number is especially important within the CAN SLIM system, as it finds market leaders that are being acknowledged and bought by other investors. This technical health, joined with the company's fundamental growth, forms a notable investment picture.

Industry Leadership and Growth Prospects

As a maker and seller of coconut water and similar products, VITA COCO has set itself up as a category frontrunner in the health drink area. The company's branded collection, including its main Vita Coco products, has achieved considerable market reach through various sales paths. The mix of high brand awareness, growing product offerings, and international growth chances sets the company to continue its progress.

The technical analysis report gives COCO a rating of 9 out of 10, observing its consistent performance over different periods. At the same time, the fundamental analysis report scores the company 6 out of 10, pointing out very good profitability and financial health next to a high valuation.

While COCO seems costly on standard valuation measures with a P/E ratio of 41.12, this high price might be reasonable given its growth path and market leader status. CAN SLIM investors usually allow for higher valuations for companies showing speeding growth and good technical traits.

For investors wanting to find more companies that fit CAN SLIM factors, view more screening results here.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consider their financial situation, risk tolerance, and investment objectives before making any investment decisions. Past performance does not guarantee future results.