For investors looking for a systematic way to find high-growth market leaders, the CAN SLIM method, created by William O'Neil, provides a disciplined structure. This approach mixes strict fundamental study with important technical signs to find stocks with solid earnings momentum, support from large investors, and leading traits, all while noting the need for a favorable general market trend. The aim is to locate companies not only with solid historical results, but with the fundamental and technical strength to keep rising.
The Vita Coco Co., Inc. (NASDAQ:COCO) recently appeared from a CAN SLIM-based filter, indicating its profile matches several central parts of the growth-oriented method. As a top maker and seller of coconut water and similar items, the company's recent financial and market results justify a more detailed examination using the CAN SLIM perspective.
Fundamental Strength: The "C" and "A" in CAN SLIM
The "C" in CAN SLIM means Current Quarterly Earnings and Sales, needing large and frequently speeding growth. The "A" calls for solid Annual Earnings Increases, confirming durability beyond one quarter. Vita Coco shows force in these parts with recent quarterly figures that satisfy the high limits often used by CAN SLIM followers.
- Quarterly Earnings Per Share (EPS) Growth: The company stated a 25% rise in EPS versus the same quarter last year, meeting the common filter minimum of 20-25%.
- Quarterly Sales Growth: Revenue growth was even stronger at over 37% year-over-year, easily passing typical filters that seek 25%+ growth.
- Annual Earnings Trend: Over the last three years, Vita Coco's EPS has increased at a compound annual rate near 39%, greatly exceeding the 25% minimum growth often wanted for the "A" part.
- Return on Equity (ROE): With an ROE of 21.36%, the company shows efficient use of shareholder equity, a main profit measure noted in the method.
These numbers point to a company not only reporting solid present figures but also adding to a history of major annual growth, a central mix for CAN SLIM investors.
Leadership and Sponsorship: The "L" and "I"
A main idea of the method is putting money into market leaders, not followers ("L"), and making sure there is institutional backing ("I") without being too full. Vita Coco's market results and ownership setup mirror these traits.
The company has a high relative strength (CRS) of 88.72, meaning it has done better than almost 89% of all stocks in the market during the past year. This is a direct gauge of leadership and a key technical filter in CAN SLIM screens, which often demand a minimum relative strength of 75. Also, institutional ownership is near 83.7%. This amount shows notable professional investor attention, confirming the company's potential, while staying under the 85% limit sometimes used to steer clear of stocks where most buying by big institutions could already be finished.
Financial Health and Market Position
The "S" in CAN SLIM looks at Supply and Demand, partly judged through financial health. Vita Coco displays a very clean balance sheet here. The company has no debt, leading to a Debt/Equity ratio of 0. This solid financial state gives operational room and lowers risk, fitting with the system's liking for companies with controllable or very little debt.
From a wider market view ("M"), the present situation is seen as positive for such methods. With the S&P 500's short-term trend good, CAN SLIM method notes that even the best individual stocks have a higher chance of doing well when the overall market trend is helpful.
Technical and Fundamental Summary
A look at the company's detailed reports backs the filter findings. The technical analysis report gives COCO a top score of 10/10, seeing both its long-term and short-term trends are good and that it is trading close to 52-week highs, a usual feature of CAN SLIM breakout possibilities. The chart displays a stock in a clear upward trend with set support levels.
On the fundamental side, the fundamental analysis report gives a score of 7/10. It points out an "excellent profitability rating" together with "great financial health," pushed by high returns on invested capital and a very strong balance sheet. The main point of care is on price, which is seen as high compared to industry rivals, a usual feature among high-growth stocks that meet CAN SLIM needs, where investors are often ready to pay more for better growth momentum.
A Candidate for Further Research
Based on the particular needs used in the CAN SLIM filter, The Vita Coco Co. presents a strong profile for growth investors. It displays forceful sales and earnings momentum, outstanding financial health with no debt, clear market leadership shown by its high relative strength, and increasing institutional attention. While its price is high, this is often measured against its high growth rate and quality figures within the method.
For investors curious about using this systematic way to find other possible leaders, the set O'Neill CANSLIM High Growth screen can act as a beginning point for more study.
Disclaimer: This article is for information only and does not make investment advice, a suggestion, or a deal to buy or sell any security. The study is based on data and a particular investment method; past results are not a sign of future outcomes. Investors should do their own complete research and think about their personal money situation and risk comfort before making any investment choices.
