When searching for stocks that combine strong fundamental growth with strong technical momentum, the CAN SLIM methodology, pioneered by William O'Neil in How to Make Money in Stocks, remains one of the most respected frameworks for growth investors. The acronym stands for Current earnings, Annual earnings, New products/management, Supply & demand, Leader or laggard, Institutional sponsorship, and Market direction. The system demands that a stock demonstrate accelerating quarterly earnings and sales, strong annual growth, high relative strength, reasonable debt levels, and institutional interest, all while the broader market trend is supportive. Using this framework, we screened for stocks that meet these rigorous criteria, and one name that stands out is Nexa Resources SA (NYSE:NEXA), a Latin American focused zinc and base metals producer.
How Nexa Resources Meets the CAN SLIM Criteria
The CAN SLIM system starts with C — Current Earnings. Nexa Resources delivers on this front emphatically. The company’s most recent quarterly earnings per share (EPS) growth compared to the same quarter last year (Q2Q) stands at a staggering 306.25%. This far exceeds the system’s baseline requirement of at least 20% and suggests a strong acceleration in profitability. Sales growth (Q2Q) also comes in strong at 41.68%, well above the 25% threshold that O’Neil recommends.
Moving to A — Annual Earnings, the system looks for consistent growth over several years. Nexa’s EPS growth over the past three years averages 31.43%, which comfortably clears the 25% minimum. Additionally, the company’s Return on Equity (ROE) of 13.22% exceeds the 10% benchmark CAN SLIM investors look for, confirming that the company is efficiently generating profits from shareholder equity.
The S — Supply & Demand and L — Leader or Laggard components are where technical analysis comes into play. Nexa’s Relative Strength (RS) rating is an exceptional 96.97, meaning it has outperformed nearly 97% of all other stocks in the market over the past 12 months. This qualifies it as a clear market leader. On the supply side, the company maintains a manageable Debt-to-Equity ratio of 1.72, which is below the 2.0 ceiling set in our CAN SLIM screen, indicating the company is not over-leveraged.
For the I — Institutional Sponsorship criterion, Nexa shows institutional ownership at 34.91%. This is well below the 85% upper limit we filter for, leaving plenty of room for new institutional buyers to accumulate shares, a key driver of future price momentum.
Technical and Fundamental Snapshot
Nexa’s overall technical rating is an 8 out of 10, supported by a long-term positive trend and a short-term neutral trend. The stock has delivered a staggering 205.58% return over the past 12 months, outperforming 96% of all stocks. While volume has been somewhat subdued recently, the stock is trading in the middle of its recent 12.02–16.25 range, suggesting a potential consolidation that could break higher.
The fundamental rating comes in at 5 out of 10. While profitability is solid, with a profit margin of 4.42% and operating margin of 13.60%, financial health is a concern. The Altman-Z score of 0.75 and a current ratio of 0.87 suggest elevated balance sheet risk. However, the valuation picture is attractive: the price-to-earnings ratio of 10.71 makes it cheaper than 90% of its industry peers, and the forward P/E of 5.85 indicates expected earnings growth is not yet priced in.
Valuation Metrics Worth Noting
From a valuation standpoint, Nexa offers attractive numbers:
- Price/Earnings (P/E): 10.71 (cheaper than 90.68% of industry peers)
- Price/Forward Earnings: 5.85
- Enterprise Value/EBITDA: Among the cheapest in the industry (outperforms 92.55% of peers)
- Dividend Yield: 5.65% (pays more than 96.89% of industry peers)
These figures suggest the market is not fully accounting for the company's growth trajectory, a common trait among CAN SLIM candidates that later break out.
Market Context and Outlook
The S&P 500 currently exhibits a positive long-term and short-term trend, which is the ideal environment for CAN SLIM investing. O’Neil’s framework explicitly warns against buying high-growth stocks in bear markets, so the current backdrop is supportive. Nexa’s technical setup shows a resistance zone between $15.78 and $16.20. A breakout above that level, especially on strong volume, could provide an entry point.
A Note on Risks
While Nexa scores well on growth and relative strength, investors should be aware of its financial health risks. The company’s low Altman-Z score and high debt-to-FCF ratio (162.24) are red flags that require monitoring. CAN SLIM practitioners are advised to use strict stop losses, O’Neil famously recommends never accepting a loss greater than 7–8%, to manage downside risk.
Find More CAN SLIM Candidates
This analysis is just one example of how the CAN SLIM system can identify high-potential growth stocks. If you want to run the same screen and discover other stocks meeting these criteria, you can access the pre-built O'Neill CANSLIM High Growth screen and start building your own watchlist.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Always conduct your own research and consider consulting with a licensed financial advisor before making any investment decisions.
Read full article here »
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Nexa Resources SA (NYSE:NEXA) Shines in CAN SLIM Screen with Triple-Digit Earnings Growth and Top-Tier Relative Strength
When searching for stocks that combine strong fundamental growth with strong technical momentum, the CAN SLIM methodology, pioneered by William O'Neil in How to Make Money in Stocks, remains one of the most respected frameworks for growth investors. The acronym stands for Current earnings, Annual earnings, New products/management, Supply & demand, Leader or laggard, Institutional sponsorship, and Market direction. The system demands that a stock demonstrate accelerating quarterly earnings and sales, strong annual growth, high relative strength, reasonable debt levels, and institutional interest, all while the broader market trend is supportive. Using this framework, we screened for stocks that meet these rigorous criteria, and one name that stands out is Nexa Resources SA (NYSE:NEXA), a Latin American focused zinc and base metals producer.
How Nexa Resources Meets the CAN SLIM Criteria
The CAN SLIM system starts with C — Current Earnings. Nexa Resources delivers on this front emphatically. The company’s most recent quarterly earnings per share (EPS) growth compared to the same quarter last year (Q2Q) stands at a staggering 306.25%. This far exceeds the system’s baseline requirement of at least 20% and suggests a strong acceleration in profitability. Sales growth (Q2Q) also comes in strong at 41.68%, well above the 25% threshold that O’Neil recommends.
Moving to A — Annual Earnings, the system looks for consistent growth over several years. Nexa’s EPS growth over the past three years averages 31.43%, which comfortably clears the 25% minimum. Additionally, the company’s Return on Equity (ROE) of 13.22% exceeds the 10% benchmark CAN SLIM investors look for, confirming that the company is efficiently generating profits from shareholder equity.
The S — Supply & Demand and L — Leader or Laggard components are where technical analysis comes into play. Nexa’s Relative Strength (RS) rating is an exceptional 96.97, meaning it has outperformed nearly 97% of all other stocks in the market over the past 12 months. This qualifies it as a clear market leader. On the supply side, the company maintains a manageable Debt-to-Equity ratio of 1.72, which is below the 2.0 ceiling set in our CAN SLIM screen, indicating the company is not over-leveraged.
For the I — Institutional Sponsorship criterion, Nexa shows institutional ownership at 34.91%. This is well below the 85% upper limit we filter for, leaving plenty of room for new institutional buyers to accumulate shares, a key driver of future price momentum.
Technical and Fundamental Snapshot
Nexa’s overall technical rating is an 8 out of 10, supported by a long-term positive trend and a short-term neutral trend. The stock has delivered a staggering 205.58% return over the past 12 months, outperforming 96% of all stocks. While volume has been somewhat subdued recently, the stock is trading in the middle of its recent 12.02–16.25 range, suggesting a potential consolidation that could break higher.
The fundamental rating comes in at 5 out of 10. While profitability is solid, with a profit margin of 4.42% and operating margin of 13.60%, financial health is a concern. The Altman-Z score of 0.75 and a current ratio of 0.87 suggest elevated balance sheet risk. However, the valuation picture is attractive: the price-to-earnings ratio of 10.71 makes it cheaper than 90% of its industry peers, and the forward P/E of 5.85 indicates expected earnings growth is not yet priced in.
Valuation Metrics Worth Noting
From a valuation standpoint, Nexa offers attractive numbers:
These figures suggest the market is not fully accounting for the company's growth trajectory, a common trait among CAN SLIM candidates that later break out.
Market Context and Outlook
The S&P 500 currently exhibits a positive long-term and short-term trend, which is the ideal environment for CAN SLIM investing. O’Neil’s framework explicitly warns against buying high-growth stocks in bear markets, so the current backdrop is supportive. Nexa’s technical setup shows a resistance zone between $15.78 and $16.20. A breakout above that level, especially on strong volume, could provide an entry point.
A Note on Risks
While Nexa scores well on growth and relative strength, investors should be aware of its financial health risks. The company’s low Altman-Z score and high debt-to-FCF ratio (162.24) are red flags that require monitoring. CAN SLIM practitioners are advised to use strict stop losses, O’Neil famously recommends never accepting a loss greater than 7–8%, to manage downside risk.
Find More CAN SLIM Candidates
This analysis is just one example of how the CAN SLIM system can identify high-potential growth stocks. If you want to run the same screen and discover other stocks meeting these criteria, you can access the pre-built O'Neill CANSLIM High Growth screen and start building your own watchlist.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Always conduct your own research and consider consulting with a licensed financial advisor before making any investment decisions.
Read full article here »