For investors wanting a methodical way to find leading companies with high growth, the CAN SLIM method, created by William O'Neil, is a foundational plan. It joins strict fundamental review with important technical signs to find stocks with solid earnings momentum, support from institutions, and leading traits, all while the general market direction is positive. This structured method tries to identify stocks in their strongest periods of expansion.
A recent filter using main CAN SLIM rules has identified DRDGOLD LTD-SPONSORED ADR (NYSE:DRD) as a possible option. The South African firm, which focuses on extracting gold from old mine waste material, shows an interesting profile when evaluated with the plan's standards.
Reviewing the Fundamental "CAN" Points
The initial three letters of CAN SLIM concentrate on present and yearly earnings power, and the company's new or top position. DRDGOLD's basic financials match well here.
- Current Earnings & Sales (C): The system looks for large, and ideally speeding up, quarterly earnings and sales increases. DRDGOLD shows a very high 97.8% year-over-year rise in its latest quarterly earnings per share, greatly exceeding the usual 20-25% minimum. Quarterly sales growth is also solid at 32.9%, passing the mark. This strong present result is a key sign the plan looks for.
- Annual Earnings Increases (A): To confirm continuity beyond one quarter, CAN SLIM requires steady yearly growth. DRDGOLD's earnings per share have increased at a typical yearly rate above 25% over the last three years, satisfying the need for "large growth." Also, the company's Return on Equity (ROE) of 29.7% shows very effective use of investor money, much higher than the 10% minimum commonly used in filters.
- New Products, New Highs (N): While DRDGOLD's business is established, its work on environmental cleanup and gold retrieval is a contemporary, lasting method in the mining industry. More measurably, the "New Highs" part is evident, as the stock has been priced near the top of its 52-week span, a technical trait the plan likes.
Examining the "SLIM" Elements
The last part of the name handles market forces, institutional interest, and general stock action.
- Supply & Demand (S): A main idea is a small number of shares available with high demand. DRDGOLD has a very low Debt-to-Equity ratio, almost nothing, which points to a firm financial position without the burden of large debt. This financial strength is a positive factor regarding supply.
- Leader or Laggard (L): CAN SLIM investors purchase market front-runners, not poor performers. DRDGOLD's relative strength score of 97.8 means it has done better than about 98% of the whole market in the last year. This outstanding relative result is a sign of the market leadership the plan needs.
- Institutional Sponsorship (I): The plan favors stocks that are being found and bought by institutional investors, but not owned so much that more buying is unlikely. With institutional ownership around 14.4%, DRDGOLD is far below a common limit of 85%, indicating potential for more institutional interest if the company's outlook improves.
Technical and Fundamental Overview
The full reports on ChartMill give a clear picture. The technical analysis gives DRDGOLD a best score of 10/10, seeing both its long-term and short-term directions as good. The stock displays a steady shape of increasing prices and is doing better than most of its industry group. Significantly, the overall market condition (the "M" in CAN SLIM) is currently helpful, with the S&P 500 in a positive short-term direction.
From a fundamental view, DRDGOLD gets a high score of 8/10. The review points out very good profit with growing margins, exceptional returns on capital, and firm, speeding growth in both earnings and sales. Its price, especially looking at expected earnings, seems fair, particularly when compared to its high growth pace.
An Option for More Study
Using the numerical filters from the CAN SLIM method, DRDGOLD shows a profile that fits the plan's aim of discovering leading companies with high growth. It displays very strong current earnings growth, firm yearly rises, better market relative strength, and a sound technical state, all during a supportive market time.
It is key to remember this filter is a first step for study, not a finished list to buy. The CAN SLIM plan also stresses reviewing price patterns for correct times to buy and carefully controlling risk with stop-loss orders, which are not part of a filtering step by itself.
Want to review other stocks that currently meet this CAN SLIM-based filter? You can see the live filtering results and change the rules to your own needs here.
Disclaimer: This article is for information and learning only and is not advice to buy, sell, or keep any security. The CAN SLIM method includes risk, and prior results do not guarantee future outcomes. Always do your own complete study and think about your personal money situation and risk comfort before making any investment choices.
