For investors looking for a systematic way to find high-growth market leaders, the CAN SLIM method, created by William O'Neil, remains 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 good market periods. A recent filter using this method has identified Hudbay Minerals Inc (NYSE:HBM) as a stock for more detailed review.
Evaluating Hudbay Against CAN SLIM Standards
The CAN SLIM acronym describes particular, measurable filters. This is how Hudbay Minerals measures up against several of the system's main fundamental needs:
- Current Quarterly Earnings & Sales (The "C"): The method requires solid recent quarterly results. Hudbay shows quarterly earnings per share (EPS) growth of 22.2% and sales growth of 25.3% against the same quarter last year, meeting the common filter limits of 20%+ EPS growth and 25%+ sales growth.
- Annual Earnings Increases (The "A"): CAN SLIM searches for a record of major growth. Hudbay displays a notable 3-year EPS compound annual growth rate (CAGR) of 89.5%, well above the usual 25% minimum. Also, its Return on Equity (ROE) of 15.0% is higher than the 10% standard, showing good use of shareholder money.
- Supply & Demand / Financial Health (The "S"): A stable balance sheet is favored. Hudbay holds a low Debt-to-Equity ratio of 0.20, which is much lower than the filter's limit of 2.0, pointing to a controlled debt level and less financial risk.
- Leader or Laggard (The "L"): This is a key technical part of CAN SLIM, focusing on relative strength. Hudbay performs very well here with a ChartMill Relative Strength (CRS) score of 98.55, meaning it has done better than almost 99% of all stocks over the last year. This verifies its position as a clear market leader.
- Institutional Sponsorship (The "I"): The method prefers stocks with institutional ownership that is meaningful but not too high, leaving space for more buying. Hudbay's institutional ownership of 77.5% is under the 85% maximum used in the filter, placing it in that possible favorable area.
Fundamental and Technical Overview
A look at Hudbay's separate reports gives a wider view beyond the filter's limits.
The company's fundamental analysis report shows a view of solid profitability but varied financial health. Main positives include very good profit margins and high returns on equity and assets compared to industry competitors. However, notes of caution are made about liquidity, with current and quick ratios below 1.0, which might signal difficulties in covering immediate debts. Valuation measures show a mixed picture: while the forward P/E ratio seems fair compared to both the industry and the wider market, the trailing P/E is high.
From a technical view, the technical analysis report is very positive, giving Hudbay a top score of 10 out of 10. The long-term trend is good, and the stock is trading in the higher part of its 52-week range. The high relative strength score is repeated here. The report also mentions a good setup pattern, with prices moving in a range and lower volatility, indicating a possible base formation. Important support is seen near $23.50, with resistance close to $27.08.
Market Setting and Final Points
The last "M" in CAN SLIM means Market Direction, reminding investors that even the best individual stock can have trouble in a negative wider market. At this time, the S&P 500 shows a good short-term trend, which matches the CAN SLIM idea of looking for entries during supportive market conditions. This gives a helpful setting for reviewing leaders like Hudbay.
It is critical to remember that while Hudbay fits many measurable CAN SLIM standards, especially high annual growth, excellent relative strength, and low debt, investors must balance these against the fundamental report's warnings on liquidity and the stock's link to changing commodity prices. The CAN SLIM method also focuses on finding "new" products or services, which may be a less exact match for a standard mining company versus a technology business, though new mining projects could meet this idea.
Interested in finding other stocks that pass similar strict growth and momentum filters? You can review the set O'Neill CANSLIM High Growth screen here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. The analysis is based on data provided and screening methodologies described, past performance is not indicative of future results. Investors should conduct their own thorough research and consider their individual financial circumstances and risk tolerance before making any investment decisions.
