Transportadora de Gas del Sur SA (NYSE:TGS) Fits the CAN SLIM Strategy with Strong Growth and Market Leadership

The CAN SLIM investment strategy, created by William O’Neil, blends fundamental and technical analysis to spot high-growth market leaders. The approach targets stocks with solid earnings and sales growth, institutional backing, and strong price performance, while also considering market trends. One stock that recently appeared in this screening is Transportadora de Gas del Sur SA (NYSE:TGS), an Argentine energy infrastructure firm. Here, we explore how TGS fits the CAN SLIM criteria and why it might attract growth-focused investors.

Key CAN SLIM Criteria and TGS’s Fit

C – Current Quarterly Earnings and Sales Growth

The CAN SLIM method favors companies with rising quarterly earnings and revenue. TGS shows 68.1% year-over-year EPS growth and 59.8% sales growth in its latest quarter, well above O’Neil’s recommended minimum of 20-25%. This performance points to strong operations, a key factor for CAN SLIM investors looking for growing profitability.

A – Annual Earnings Growth

Long-term growth is another focus of the strategy. TGS has a three-year EPS compound annual growth rate (CAGR) of 111.3%, far exceeding the 25-50% range O’Neil suggests. Its Return on Equity (ROE) of 18.9% also highlights efficient use of capital, adding to its fundamental appeal.

N – New Products, Management, or Highs

While qualitative aspects like innovation are harder to gauge, TGS operates in Latin America’s changing energy sector, where gas infrastructure demand stays strong. On the technical side, the stock has held up well, trading near the top of its 52-week range, though not at new highs. Investors might watch for possible breakouts.

S – Supply and Demand Dynamics

TGS has a low debt-to-equity ratio of 0.21, significantly below the screener’s maximum limit of 2. This cautious approach to debt lowers financial risk, a plus for CAN SLIM followers who prefer companies with balanced debt levels.

L – Market Leadership

Price performance is a crucial technical filter, and TGS scores 86.7 out of 100, meaning it has beaten nearly 87% of all stocks over the past year. This matches CAN SLIM’s focus on top-performing stocks.

I – Institutional Sponsorship

Institutional ownership is 8.8%, under the screener’s 85% cap. While lower than U.S. peers, this could reflect regional market differences. Still, rising institutional interest might offer upside if earnings growth continues.

M – Market Direction

The broader market (S&P 500) remains in an upward trend, aligning with CAN SLIM’s rule of investing in sync with the market. TGS’s technical rating of 10/10 shows strong price action, with both short- and long-term trends positive.

Technical and Fundamental Summary

• Technical Analysis: TGS is in a clear uptrend, with support near $27.18-$27.63 and resistance around $29.78-$30.07. The stock’s high relative strength and bullish pattern hint at further gains if it breaks resistance. (Full TA Report)
• Fundamental Analysis: TGS earns a 6/10 rating, scoring well for profitability (ROE, margins) and financial health (low debt, good liquidity). Valuation seems high, but growth metrics warrant closer review. (Full FA Report)

Final Thoughts

TGS aligns with many CAN SLIM criteria, especially in earnings growth, price performance, and financial stability. While institutional ownership is limited, the stock’s technical and fundamental strengths make it worth further study.

For more CAN SLIM-aligned stocks, check the predefined screener here.

Disclaimer: This analysis is not investment advice. Always do your own research or consult a financial advisor before making investment decisions.