The CAN SLIM investment system, popularized by William O'Neil, is a structured method for finding high-growth market leaders. It joins detailed fundamental study with important technical signs to locate stocks with solid earnings momentum, institutional support, and good market conditions. The method looks for companies showing large recent and yearly earnings growth, trading close to new highs with solid relative strength, and functioning inside a sound overall market trend.
GENERAL ELECTRIC (NYSE:GE) appears as a significant candidate from a screen created on central CAN SLIM ideas. The company, now functioning as GE Aerospace after its corporate separation, concentrates on jet and turboprop engines and integrated systems for commercial and military aviation. An examination of its financial and technical profile shows agreement with many of the system's important filters.
Meeting the CAN SLIM Criteria
The CAN SLIM acronym describes particular, measurable standards for stock selection. Using the given data, GE satisfies or goes beyond several of these basic needs:
- Current Quarterly Earnings & Sales (C): The system requires large or speeding-up quarterly growth. GE's latest quarterly earnings per share increased by 44.3% year-over-year, while sales rose by 26.4%. These numbers easily exceed the common minimum levels of 20-25% for EPS and sales growth, showing strong recent operational momentum.
- Annual Earnings Increases (A): CAN SLIM searches for a record of large growth. GE displays a 3-year EPS compound annual growth rate (CAGR) of 28.2%, going beyond the 25% standard. Also, its Return on Equity (ROE) of 42.9% is outstanding, far exceeding the minimum need of 10% and indicating very efficient use of shareholder capital.
- Leader vs. Laggard (L): A key part of the system is investing in market leaders, not laggards. This is measured by relative strength (RS), which compares a stock's price performance to the wider market. GE's RS rating of 90.6 means it has performed better than over 90% of all stocks in the last year, firmly putting it in the market leader group the method looks for.
- Institutional Sponsorship (I): The method prefers stocks with institutional ownership, but not so high that all possible buying is finished. GE's institutional ownership is 80.1%, which is under the 85% limit often used in screens, indicating there is still space for more institutional accumulation.
- Supply & Demand (S): Concerning financial health and share supply, GE's Debt-to-Equity ratio of 1.0 is inside the acceptable range (below 2), showing a workable level of debt financing.
Fundamental and Technical Synopsis
A broad examination of GE's separate reports gives setting for its CAN SLIM agreement.
The company's fundamental analysis report gives it a score of 6 out of 10, noting a mixed but getting better situation. Its profitability is a clear positive, with very good margins and a top-level ROE. Growth is speeding up, with solid recent EPS and sales increases and positive future estimates. Valuation stays on the higher side based on traditional P/E measures, though this can be accepted because of its high growth rate and profitability. The primary worries are in financial health, especially about liquidity ratios.
From a technical view, the technical analysis report is especially strong, giving a complete score of 10 out of 10. Both the long-term and short-term trends are positive, and the stock is trading near its 52-week high. The high relative strength rating is supported here. The report also mentions a positive "bull flag" pattern, hinting at a possible continuation of the upward trend after a time of consolidation.
Market Context and Considerations
The "M" in CAN SLIM means Market Direction, stressing the importance of the overall market trend. At present, both the long-term and short-term trends for the S&P 500 are positive. This helpful market setting is a vital background for any CAN SLIM-style investment, as even the most solid stocks can have difficulty in a falling market.
It is important to state that some non-quantitative parts of the "N" rule—New Products, New Management—are less simple to screen. For GE, its change into a focused aerospace pure-play after its corporate restructuring could be seen as an important "new" phase, fitting with the idea of this rule.
Exploring Further CAN SLIM Candidates
GE's profile shows how a large, changed industrial company can display the growth and momentum features wanted by the CAN SLIM method. For investors curious about using this system to find other possible candidates, the preset screen used in this study is a useful beginning point.
You can examine and adjust this O'Neill CANSLIM High Growth screen yourself to see current market candidates that meet these structured standards: View the CANSLIM Stock Screen.
Disclaimer: This article is for information only and does not form investment advice, a suggestion, or an offer to buy or sell any security. The CAN SLIM method includes risk, and past results are not a guide for future outcomes. Investors should do their own complete investigation and study, thinking about their personal financial situation and risk tolerance, before making any investment choices.
