For investors looking for a structured way to find leading companies with high growth, the CAN SLIM method, created by William O'Neil, provides a rule-based system. This approach mixes detailed examination of company finances with important chart-based signals to find stocks with good profit growth, support from large investment firms, and traits of a market frontrunner, preferably when the overall market is positive. The aim is to locate firms not only with solid financial statements, but with the market attention and trend that point to continued price gains.
A recent filter using this method has identified INNOVATIVE SOLUTIONS & SUPPORT INC (NASDAQ:ISSC) as a stock that merits more detailed review. The Pennsylvania-based maker of aircraft navigation and cockpit systems seems to fit a number of the main CAN SLIM principles, offering an interesting picture for investors focused on growth.
Matching the CAN SLIM Standards
The CAN SLIM letters represent particular, measurable standards. Here is how ISSC measures up against several of the system's important fundamental checks:
- C - Current Quarterly Earnings & Sales: The system requires good, and ideally speeding up, recent expansion. ISSC posts a quarterly earnings per share (EPS) increase of 57.1% and sales increase of 44.6% versus the same quarter a year ago, easily passing the usual minimum levels of 20-25%. This shows strong short-term business performance.
- A - Annual Earnings Increases: To confirm durability beyond one quarter, CAN SLIM searches for a past of good yearly growth. ISSC displays a 3-year EPS compound annual growth rate (CAGR) of 39.9%, much higher than the 25% standard, proving an established history of growth.
- L - Leader or Laggard: This is judged by relative strength (RS), which measures a stock’s price action against the wider market. A high RS shows leadership. ISSC has a ChartMill Relative Strength of 96.7, meaning it has done better than almost 97% of all stocks. This is a firm chart-based sign of market leadership, a key part of the CAN SLIM idea.
- S - Supply, Demand, and Financial Health: The system prefers companies with healthy balance sheets. ISSC holds a Debt-to-Equity ratio of 0.34, much lower than the filter's limit of 2.0, showing a careful use of debt and reduced financial danger.
- I - Institutional Sponsorship: While some ownership by large firms is good, very high levels can reduce possible future buying. ISSC’s institutional ownership is 47.6%, which is under the 85% maximum and indicates potential for more institutional finding and buying.
- Profitability Quality: Beyond growth speeds, CAN SLIM appreciates high-grade profitability. ISSC’s Return on Equity (ROE) of 24.2% is outstanding, showing effective use of investor money and matching the system's emphasis on excellent fundamental measures.
Fundamental and Technical Overview
A look at ISSC’s detailed fundamental analysis supports the filter findings. The company receives a good total fundamental score of 7 out of 10, with special force in Profitability (score: 9/10) and Growth (score: 8/10). Its profit margins and returns on capital are near the best in the Aerospace & Defense sector. The main point of care in the report focuses on price, which is viewed as neutral to somewhat high on some future measures, though still low compared to many industry competitors.
From a chart-based view, the technical analysis report gives ISSC a score of 7 out of 10. The longer-term direction is up, backed by the stock price being above its important average prices. The very high relative strength (96.7) is often noted as a key plus. However, the short-term direction is now neutral, with the stock settling within a band after a large rise over the past year. The report states that while the chart base is very good, the recent price swings suggest it may not offer a perfect, low-chance entry point right now, recommending investors look for a clearer settling pattern.
A Stock for More Study
INNOVATIVE SOLUTIONS & SUPPORT INC makes a firm argument for investors using the CAN SLIM system. It shows the fast quarterly growth, notable yearly profit path, exceptional market-leading relative strength, and healthy financial state the method looks for. The mix of high profitability and firm institutional, but not too high, ownership further supports its case.
While the present chart view indicates a time of settling, the fundamental driver of the stock seems unchanged. For investors who accept the CAN SLIM idea that excellent profit growth paired with market leadership is a strong mix, ISSC deserves a spot on a watchlist for possible chances in line with the overall market trend.
Interested in finding other stocks that pass like CAN SLIM-inspired filters? You can use the filter yourself and view the present results here.
Disclaimer: This article is for information and learning only and does not form a suggestion to purchase, sell, or keep any security. The study is based on data and a set filter method; it is not individual investment guidance. Investors must do their own complete research, think about their personal money situation and risk comfort, and talk with a registered financial consultant before making any investment choices.
