Futu Holdings Ltd. ADR (NASDAQ:FUTU) Emerges as a CAN SLIM Growth Candidate

Investors looking to find high-growth market leaders frequently use established methods to sort the wide array of stocks. One of the most lasting systems is the CAN SLIM strategy, made well-known by William O'Neil. This method mixes fundamental and technical study to find companies showing powerful earnings speed, better relative strength, and institutional backing, all while the general market trend is positive. The aim is to put money into top companies just as they are starting to gain notice from the wider market, trying to gain major price increases during their period of growth.

A recent filter using the main principles of the CAN SLIM system has pointed to Futu Holdings Ltd. ADR (NASDAQ:FUTU) as a possible candidate for more review. The Hong Kong-based digital brokerage platform seems to fit a number of the strategy's numerical standards, indicating a profile that matches the growth and momentum traits CAN SLIM investors usually look for.

Fundamental Growth: The "C" and "A" in CAN SLIM

The "C" and "A" in CAN SLIM stress current and yearly earnings power. The system searches for companies displaying large, and preferably speeding up, three-month earnings and sales growth, supported by a solid record of yearly earnings gains. This concentration makes sure the company is not a single-quarter surprise but is going through continued, forceful business momentum.

Futu's latest financial results relate directly to these points:

• Large Three-Month Growth: The company reported a very large 134.2% year-over-year growth in earnings per share (EPS) for its latest three-month period, well above the common CAN SLIM lowest limit of 20-25%. Income for the same time grew by a notable 86.3%.
• Solid Yearly Path: Over the last three years, Futu has reached an EPS compound annual growth rate (CAGR) of about 28.8%, showing the steady yearly earnings growth the "A" point requires.
• Outstanding Profitability: A main gauge of management effectiveness, Futu's Return on Equity (ROE) is at a strong 26.9%. This shows the company is creating significant profit from shareholder equity, a sign of a well-operated growth business.

Leadership and Sponsorship: The "L" and "I" Factors

The "L" in CAN SLIM means "Leader or Laggard," pushing investors to concentrate on stocks displaying better price action compared to the wider market. The "I" relates to "Institutional Sponsorship," which looks for increasing, but not too high, ownership by professional investment firms.

Futu's profile shows force in these parts:

• Market Leader Action: With a ChartMill Relative Strength (CRS) score of 92.1, Futu's price action over the past year has done better than 92% of all stocks. This puts it clearly in the market leadership group CAN SLIM focuses on, hinting the market is acknowledging its fundamental force.
• Good Institutional Attention: Institutional ownership is noted at about 44.4%. This amount is far under the 85% top limit often used in CAN SLIM filters, showing there is still plenty of space for more institutional purchasing as the company's narrative gets more notice.

Financial Health and Valuation Setting

Outside the main acronym, the CAN SLIM approach also thinks about financial steadiness and valuation. Futu shows a varied but mostly good image here. The company keeps a good Debt-to-Equity ratio of 0.36, showing a careful balance sheet not weighed down by borrowing—a plus for the "S" (Supply and Demand) factor about financial risk.

A broad look at the company's fundamental analysis report gives it a score of 6 out of 10, stating "excellent growth" and "excellent on profitability" while marking some questions about financial health measures. From a valuation view, the stock sells at a forward P/E ratio that is fair both compared to its industry and its own high growth rate.

Technical and Market Points

The last letter, "M," tells investors to always think about the general Market Direction. At this time, the S&P 500 keeps positive long-term and short-term trends, giving a helpful setting for growth-focused strategies like CAN SLIM.

Futu's technical analysis report presents a more detailed short-term image, with a score of 4 out of 10. While the long-term trend stays positive and the stock has been a top performer over the past year, the short-term trend has lately turned negative, and the stock is settling below its 52-week high. For CAN SLIM investors, this highlights the need for timing and finding correct entry points, like a move upward from a settling pattern on high trading volume, instead of following the stock higher.

A Candidate for More Study

Built on the numerical filters coming from the CAN SLIM strategy, Futu Holdings presents a strong case for growth investors. It shows the large three-month earnings growth, solid yearly path, high profitability, and market-leading relative strength that the system is made to find. Its fair institutional ownership and sound balance sheet give more support to the idea.

But, the present technical situation hints waiting may be needed. Investors following the method closely would probably wait for the stock to finish its settling and show a new high with forceful volume demand before thinking about an entry, always using a stop-loss to handle risk.

Interested in reviewing other stocks that pass similar CAN SLIM-based filters? You can run the filter yourself and see the present outcomes here.

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Disclaimer: This article is for information and learning only and does not form a suggestion to buy, sell, or keep any security. The CAN SLIM method includes both fundamental and technical study and has risk, including the loss of original money. Investors should do their own complete research and think about their personal financial position and risk comfort before making any investment choices.