Transportadora de Gas del Sur SA (NYSE:TGS): A CANSLIM Candidate
By Mill Chart
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Transportadora de Gas del Sur SA (NYSE:TGS) operates a gas pipeline system in Latin America, connecting major gas fields in Argentina with distributors and industrial customers. The company has shown strong financial performance, making it a potential candidate for investors following the CANSLIM strategy.
CANSLIM Investing Overview
The CANSLIM strategy, developed by William O’Neil, combines fundamental and technical analysis to identify high-growth stocks. It focuses on companies with strong earnings, sales growth, and relative strength while considering market trends. Below, we examine how TGS fits these criteria.
C – Current Earnings & Sales Growth
TGS reports a 2,531% year-over-year EPS growth and 96% revenue growth in the latest quarter, far exceeding the CANSLIM minimum of 20-25%. This acceleration suggests strong business momentum.
A – Annual Earnings Growth
The company’s three-year EPS growth stands at 111%, well above the 25% threshold. Additionally, its Return on Equity (ROE) of 19.54% indicates efficient capital usage, another positive signal for growth investors.
N – New Highs & Industry Trends
While TGS is not a new company, its recent financial performance reflects strong industry demand. The stock has shown resilience, with a relative strength of 86.39, outperforming 86% of its peers in the Oil, Gas & Consumable Fuels sector.
S – Supply & Demand
TGS has a low debt-to-equity ratio of 0.22, indicating financial stability. The stock’s liquidity is adequate, with average daily volume supporting institutional interest.
L – Market Leadership
With a high relative strength score, TGS is a market leader in its sector. Its profitability metrics, including a 30.18% profit margin, further reinforce its competitive position.
I – Institutional Sponsorship
Institutional ownership is currently 8.88%, which is low but could indicate room for increased institutional interest as earnings growth continues.
M – Market Direction
The S&P 500’s long-term trend is negative, while the short-term trend is neutral. Investors should monitor broader market conditions before making decisions.
Technical & Fundamental Summary
- Fundamental Analysis: TGS scores 5/10, with strong profitability but some concerns over valuation. Read the full FA report here.
- Technical Analysis: The stock has a 2/10 technical rating, with a neutral long-term trend but negative short-term signals. See the TA report here.
Conclusion
TGS meets several key CANSLIM criteria, particularly in earnings and sales growth, profitability, and relative strength. However, investors should weigh technical weakness and broader market conditions before considering a position.
