Growth investing methods often look for companies with strong forward motion, combining sound financial condition with favorable market view. One organized method to this type of investing is the CAN SLIM system, made well-known by William O'Neil. This method looks for stocks showing notable quarterly and yearly earnings increases, high return on equity, a top position in their field, and investment from funds, all while noting the need to purchase during good overall market periods. The aim is to locate market front-runners early in their expansion path.
A recent filter using this CAN SLIM structure has identified Vertiv Holdings Co-A (NYSE:VRT) as a possible option. The company, which supplies important digital infrastructure technology for data centers and communication networks, seems to fit several main parts of the method.
Evaluating the "C" and "A" in CAN SLIM
The first two letters of the name focus on present and yearly earnings strength, which are basic for finding speeding up expansion.
- Present Quarterly Growth (C): CAN SLIM searches for major quarterly earnings and sales rises, often over 20-25%. Vertiv shows solid forward motion here, with its latest quarterly earnings per share (EPS) rising by 63.2% and revenue going up by 29.0% versus the same quarter last year. This quickening in profit is a good sign that need for its infrastructure products stays sound.
- Yearly Earnings Rises (A): The method needs a record of major yearly growth to confirm it can continue. Vertiv's three-year EPS compound annual growth rate (CAGR) is at a notable 55.4%, well above common lowest limits. Also, its Return on Equity (ROE) of 29.5% shows very effective use of investor money, a sign of a profitable expanding company.
Front-Runner Position, Fund Investment, and Financial Condition
The next standards judge the stock's market place and basic financial soundness.
- Front-Runner or Weak Performer (L): A central idea of CAN SLIM is to put money in market front-runners, not weak performers. This is measured by relative strength, which checks a stock's price action against the wider market. Vertiv has a ChartMill Relative Strength (CRS) score of 92.9, meaning it has done better than over 92% of all stocks. This high score confirms its place as a current market front-runner.
- Fund Investment (I): The method prefers stocks that are being found and bought by investment funds, but not so much that future buying is restricted. Vertiv's fund ownership of about 80.2% is in an acceptable area, indicating there is still space for more fund attention.
- Supply and Demand (S): From a basic view, this includes checking the company's debt amounts. A smaller debt-to-equity ratio is usually wanted. Vertiv's ratio of 0.83 shows a workable level of debt use, which helps its expansion path without over-burdening the company finances.
Technical and Basic Summary
A look at Vertiv's own analysis reports gives a united view of its present status.
- Technical Analysis: The technical report gives a highest score of 10/10, seeing steady good directions in both short and long-term periods. The stock is changing hands near the high point of its 52-week span, confirming its solid forward motion. However, the report sees that recent price movement may need investors to look for a more settled pattern for a better time to enter.
- Basic Analysis: The basic report gives a score of 7/10, pointing out very good scores in condition and profit inside the electrical equipment field. The summary mentions "very good condition and profit scores" and notes the company is "increasing strongly," making it fitting for growth and quality investing. While the P/E ratio seems high in simple terms, it is seen as fair compared to field similar companies and when thinking of the company's high growth speed and profit.
An Option for More Study
Based on the particular measures matched with the CAN SLIM filter, Vertiv shows a notable outline for growth-focused investors. It meets strict needs for fast earnings growth, high profit, leading market relative strength, and acceptable fund and debt levels. The overall "M" for market direction also fits, as the present long and short-term direction for the S&P 500 stays good, giving a helpful setting for such methods.
For investors wanting to find other companies that pass similar growth and forward motion filters, the set O'Neill CANSLIM High Growth screen can work as a beginning point for more study.
Disclaimer: This article is for information only and is not financial guidance, a support, or a suggestion to purchase, sell, or keep any security. Investing has risk, including the possible loss of the original amount. Readers should do their own complete study and think about their personal money situation and risk comfort before making any investment choices.
