X Financial-ADR (NYSE:XYF) Analyzed Through the CAN SLIM Investing Strategy

The CAN SLIM investing strategy, created by William O’Neil, merges fundamental and technical analysis to spot high-growth stocks with solid momentum. The approach highlights companies showing faster earnings and sales growth, leading positions in their sectors, and backing from institutional investors, all while stressing the need to consider market trends. Stocks fitting these conditions often show the chance for notable price gains, appealing to investors focused on growth.

X Financial-ADR (NYSE:XYF) stands out as a stock to review using the CAN SLIM framework. Here, we explain how XYF matches the strategy’s main parts:

C – Current Quarterly Earnings and Sales Growth

The method calls for solid recent quarterly results, with EPS and revenue growth ideally above 20-25%. XYF’s data includes:

• Quarterly EPS Growth (Q2Q): 44.26%
• Quarterly Revenue Growth (Q2Q): 60.43%

These numbers easily exceed O’Neil’s targets, showing strong business progress. Faster growth is a key trait of CAN SLIM stocks, as it points to rising demand and better operations.

A – Annual Earnings Growth

CAN SLIM prefers firms with steady yearly earnings growth. XYF’s 3-year EPS CAGR of 28.92% shows lasting profitability, well over the 25% minimum. Its Return on Equity (ROE) of 21.99% also highlights effective use of capital, another plus for growth-focused investors.

N – New Products, Management, or Highs

While aspects like innovation are harder to measure, XYF works in China’s fintech space—a fast-growing field powered by digital financial services. Though the stock isn’t at new highs (a technical point we’ll cover later), its core business fits the "new" idea through tech-based lending and wealth management platforms.

S – Supply and Demand

XYF’s debt-to-equity ratio of 0.34 shows a careful capital setup, lowering financial risk. Though the float and institutional ownership figures are below usual CAN SLIM picks (institutional ownership is only 3.95%), the stock’s liquidity is enough, with decent trading volume for buying and selling.

L – Market Leadership

Relative strength (RS) tracks a stock’s price performance versus the wider market. XYF’s RS rating of 97.34 puts it in the top 3% of all stocks, a clear sign of leadership. This matches CAN SLIM’s focus on top-performing stocks that beat competitors.

I – Institutional Sponsorship

While institutional ownership is limited, the lack of heavy institutional activity might offer a chance if bigger investors start buying. Still, this is a weaker part of XYF’s profile compared to typical CAN SLIM choices.

M – Market Direction

The broader market (S&P 500) stays in an upward trend, which helps the CAN SLIM method. However, XYF’s recent technical performance has been softer, with a short-term decline and price movement near the lower part of its 52-week range. Investors should watch if the stock can pick up speed alongside the market.

Technical and Fundamental Summary

• Fundamental Analysis: XYF gets a 5/10 rating, with strong points in profitability (ROE, margins) and growth (EPS, revenue), but weaker spots in valuation and institutional ownership. See full FA report here.
• Technical Analysis: The stock scores 4/10, showing solid long-term results but recent struggles. The setup quality is middling, suggesting care until a clearer trend forms. See full TA report here.

Conclusion

XYF fits several CAN SLIM standards, especially in earnings growth, relative strength, and industry role. Yet, its low institutional ownership and recent technical challenges call for closer review. Investors should balance these factors with their risk appetite and watch for better price movement.

For more CAN SLIM-aligned stock ideas, check our predefined screener here.

Disclaimer: This review is not investment advice. Do your own research or talk to a financial expert before making investment choices.