Investors looking to find high-growth market leaders frequently use systematic methods that join fundamental soundness with technical momentum. One of the most lasting and regarded of these methods is the CAN SLIM system, created by William O'Neil. This approach concentrates on companies showing powerful recent and yearly earnings increases, new products or services, and notable institutional backing, all while showing high relative price performance during a positive general market phase. It is a structured system intended to find stocks in the initial phases of a large price rise.
A recent filter using the main CAN SLIM rules has identified VITA COCO CO INC/THE (NASDAQ:COCO) as a possible candidate for more detailed review. The coconut water maker seems to match several important parts of the growth-centered method.
Matching the CAN SLIM Rules
The CAN SLIM acronym gives a clear list for assessing growth stocks. Using the given data, Vita Coco shows soundness in several areas:
- C - Current Quarterly Earnings & Sales: The method requires large or speeding up quarterly growth. Vita Coco states a 25% year-over-year rise in EPS and a large 37.2% jump in revenue for the latest quarter, easily passing the usual minimum limits.
- A - Annual Earnings Increases: Search for a record of large growth. With a 3-year EPS compound annual growth rate (CAGR) of about 39.2%, the company displays a forceful and steady upward path in earnings.
- N - New Products, New Highs: While based on judgment, Vita Coco works in the increasing functional drink group. From a chart viewpoint, the stock is changing hands close to the top part of its 52-week span, a trait O’Neil links with leading stocks.
- L - Leader or Laggard: This is judged by relative strength (RS), which matches a stock’s price action to the wider market. A high RS score shows leadership. Vita Coco’s RS of 90.75 means it has done better than over 90% of all stocks, a sign of a market leader and a key chart filter in the CAN SLIM method.
- I - Institutional Sponsorship: The approach looks for stocks with institutional ownership that exists but is not too high. Vita Coco’s institutional ownership of 83.7% is lower than the 85% limit used in the filter, indicating potential for more institutional buying.
- S & M - Supply/Demand & Market Direction: The company has no debt, showing a sound financial position. Also, the existing positive long-term and short-term phases in the S&P 500, as mentioned in the market details, meet the "M" part of investing in line with the general market phase.
Fundamental and Chart Soundness
An inspection of Vita Coco’s detailed Fundamental Analysis report shows a company in good financial condition. It receives high scores for earnings ability, with a Return on Equity (ROE) of 21.4% and very good marks for financial health and cash availability, supported by a no-debt balance sheet. The growth score is also high, backed by the notable past and expected future earnings growth. The main point of care in the fundamental report focuses on price, with measures like the P/E ratio seeming high compared to industry rivals, a typical trait of high-growth firms that investors must balance against the growth outlook.
The Technical Analysis report adds to this view with a best score of 9 out of 10. The review indicates steady positive results across many time periods and the extremely high relative strength confirms its leading position. The chart displays the stock in a holding pattern near high prices, with a recently seen "Pocket Pivot" signal hinting at buying. The chart position shows clear support and resistance points, which can assist careful investors in finding possible entry spots with controlled risk.
A Candidate for Growth-Centered Investors
Vita Coco offers a strong case for investors applying the CAN SLIM system. It meets the necessary points of forceful earnings growth, better-than-market relative strength, and good institutional attention, all inside a healthy financial setup. The mix of high fundamental growth numbers and positive chart momentum fits with the method's central idea of purchasing the top-performing stocks in the market when their basic business is speeding up.
While the price needs thoughtful review, the CAN SLIM method focuses on growth and price momentum, often taking higher valuations for companies showing such fast business momentum and market leadership. As usual, the final "M" for Market Direction stays key, the existing positive phase gives a helpful setting for such growth-focused investments.
Interested in finding other companies that match this growth-focused model? You can run the same CAN SLIM filter using this pre-configured link to see the present list of passing stocks.
Disclaimer: This article is for information only and does not form investment guidance, a suggestion, or an offer or request to buy or sell any securities. The review is based on supplied data and shows the CAN SLIM investment method system. Investors must do their own complete investigation and due care, thinking about their personal money situation and risk comfort, before making any investment choices. Past results are not a guide for future results.
