For investors looking for a structured way to find high-growth market leaders, the CAN SLIM method, created by William O'Neil, is a foundational strategy. It mixes strict fundamental study with important technical signs to find stocks with solid earnings momentum, institutional backing, and leading traits, best bought during positive market periods. This organized system tries to seize stocks at the beginning of a major price increase.
A recent filter using main CAN SLIM rules has identified Futu Holdings Ltd-ADR (NASDAQ:FUTU) as a stock for more study. The Hong Kong fintech firm, which offers a digital brokerage and wealth management service, seems to match a number of the strategy's numerical rules.
Reviewing the CAN SLIM Rules
The CAN SLIM method judges stocks on seven main points. Here is how Futu Holdings compares on several of the important, measurable filters:
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Current Quarterly Earnings & Sales (C): The strategy requires large, and ideally speeding up, quarterly growth. Futu does very well here, stating a large 134.2% year-over-year earnings per share (EPS) growth and an 86.3% rise in revenue for its latest quarter. This greatly passes the usual minimum levels of 20-25% wanted by CAN SLIM investors, showing strong operational momentum.
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Annual Earnings Increases (A): Continued yearly growth is needed to confirm a company's expansion is not a single-quarter event. Futu shows this with a solid three-year EPS compound annual growth rate (CAGR) of about 28.8%. Also, its Return on Equity (ROE) of 26.9% is much higher than the 10% minimum, pointing to good use of shareholder money and better profitability in its industry.
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Supply and Demand (S): A good balance sheet aids growth. Futu's Debt-to-Equity ratio of 0.36 is much lower than the filter's limit of 2, showing a careful use of debt and good financial room, which fits the system's liking for manageable "supply" of debt.
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Leader or Laggard (L): CAN SLIM centers on market leaders, not laggards. This is measured using relative strength, which compares a stock's price action to the wider market. Futu's relative strength of 80.83 means it has done better than over 80% of all stocks, putting it clearly in the leading group the strategy looks for.
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Institutional Sponsorship (I): Rising interest from institutional investors can give a boost. With institutional ownership at 52.7%, Futu indicates sponsorship while staying under the 85% top level often used to skip stocks where institutional buying could be full, allowing space for more ownership.
Fundamental and Technical Overview
A look at Futu’s detailed fundamental analysis supports the growth story. The report gives a score of 6 out of 10, noting very good profitability and strong growth numbers, but also pointing out some worries about financial health based on its Altman-Z score. The price seems fair next to its high growth rate, with a forward P/E ratio that is good compared to both industry similar companies and the wider S&P 500.
The technical analysis view shows a more varied short-term image. While the long-term trend is neutral and the stock has done much better than the market over the last year, the short-term trend is now negative. The stock is trading nearer to the bottom of its recent range. But, the report states that this period of stability has created a possible setup, with clear support levels close, which CAN SLIM investors might observe for a high-volume move above resistance.
Is FUTU a CAN SLIM Stock?
Based on the numerical filters from O’Neil’s method, Futu Holdings shows a strong profile for growth-focused investors. It provides the large quarterly earnings and sales growth, good annual EPS increase, high profitability, market-leading relative strength, and balanced institutional ownership that the CAN SLIM system values. These parts indicate the company has the fundamental "fuel" the strategy wants.
However, the present neutral-to-negative short-term technical position and noted financial health numbers highlight the importance of the "M" in CAN SLIM: Market Direction. The system suggests investing money only when the overall market trend is positive. With the S&P 500's trend also neutral, a careful investor would probably watch Futu for a positive technical change—like a strong move up from its present period of stability on higher-than-normal volume—happening at the same time as a better wider market trend before thinking about buying.
For investors using similar filters, you can see the newest CAN SLIM screening outcomes and change the rules via this link.
Disclaimer: This article is for information and learning only and is not a suggestion to buy, sell, or keep any security. The study is based on data and a particular investment method; it is not individual investment guidance. Investors should do their own full research and think about their personal money situation, risk comfort, and investment goals before making any choices.
