Growth investors following the CAN SLIM methodology, popularized by William O’Neil in his classic book “How to Make Money in Stocks,” look for a specific blend of accelerating fundamentals, technical strength, and market leadership. The system’s acronym stands for Current quarterly earnings, Annual earnings growth, New products or highs, Supply and demand dynamics, Leader or laggard status, Institutional sponsorship, and Market direction. The approach combines rigorous fundamental checks with technical confirmation, expecting that the best-performing stocks will show rising profits, strong sales, and relative price strength, all while the broader market trend supports the move.
We applied a CAN SLIM-inspired stock screener to the U.S. market and identified General Electric (NYSE:GE). The company, a major player in aerospace and defense, currently fits several key criteria that CAN SLIM investors seek. Below we break down why GE is making the grade in this screening process.
Recent Performance and Technical Strength
CAN SLIM places heavy emphasis on technical confirmation alongside fundamentals. The “L” in the acronym stands for “Leader or Laggard,” measured by relative strength. GE’s ChartMill Relative Strength (CRS) stands at 89.16, meaning it outperforms 89% of all stocks in the market. This places it firmly in the “leader” category. The overall technical rating for the stock is a near-perfect 10 out of 10, with the short- and long-term trends both positive, and the stock currently trading near its 52-week high of $379.67. This combination of price momentum and relative strength is exactly what the system asks for: investors want stocks that are not just fundamentally sound but are already demonstrating market acceptance.
The “N” in CAN SLIM also considers new highs. GE is trading close to its 52-week peak, a signal that the stock is breaking out rather than lingering in a range. Volume is also strong, with an average daily turnover of nearly 6 million shares, providing the liquidity needed for institutional-sized trades.
Fundamental Criteria: Earnings, Sales, and Growth
The “C” and “A” of CAN SLIM focus on current and annual earnings growth. GE meets both thresholds with room to spare. Its quarterly earnings per share (EPS) growth, comparing the last quarter to the same quarter last year, stands at 24.83%, well above the 20% minimum the screener used. Similarly, sales (revenue) growth over the same period is 29.03%, exceeding the 25% threshold. On an annual basis, the company’s 3-year EPS compound annual growth rate is 28.45%, again clearing the 25% bar set by the screener. This demonstrates that the growth is not a one-quarter fluke.
Return on equity (ROE), a key profitability metric in the “A” component, is a stellar 47.79%. This is far above the 10% minimum used in the screen and indicates that the company is efficiently generating profits from shareholder equity. The full fundamental analysis report confirms this strength: GE scores 8 out of 10 for profitability, with top-quartile profit margins and strong operating margins.
Financial Health and Valuation
While CAN SLIM does not demand a pristine balance sheet, it does look for manageable debt. The “S” (Supply and Demand) component suggests a preference for lower debt-to-equity ratios. GE’s debt-to-equity ratio is 1.01, which, while not ultra-low, is comfortably below the 2.0 maximum set in our screen. Additionally, institutional ownership sits at 80.88%, below the 85% cap, ensuring there is still room for new institutional buyers to enter—a key aspect of the “I” criterion.
Valuation, however, is a more subtle area. The technical analysis report gives GE a top 10 out of 10 rating, reflecting its strong trend and momentum. But on the valuation side, the FA report scores only 3 out of 10, with a price-to-earnings ratio of 55.36 and a forward P/E of 41.71. This is expensive compared to the broader market. In CAN SLIM, a high P/E can be justified if the growth trajectory supports it—GE’s expected earnings growth of 14.30% annually and revenue growth of 9.72% over the next few years provide some support. The combination of strong margins and accelerating revenue growth (turning from negative to positive) is a positive “evolution” factor.
Summary and Next Steps
GE presents a mixed but appealing profile for the CAN SLIM investor. It performs well on profitability, technical momentum, and relative strength, meeting the majority of the screener’s fundamental filters. Its expensive valuation is the primary concern, but the growth rates and market leadership may offset this for those following a momentum-driven growth strategy.
If you want to explore other stocks that pass the same CAN SLIM-inspired screen, you can find the full list of qualifying candidates here. The screener dynamically updates with market data, giving you a current view of the stocks that meet these criteria.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Always conduct your own due diligence before making any investment decisions.
Read full article here »
View the Zacks #1 Rank List
GE Passes CAN SLIM Screen with Near-Perfect Technicals and Strong Fundamentals (NYSE:GE)
Growth investors following the CAN SLIM methodology, popularized by William O’Neil in his classic book “How to Make Money in Stocks,” look for a specific blend of accelerating fundamentals, technical strength, and market leadership. The system’s acronym stands for Current quarterly earnings, Annual earnings growth, New products or highs, Supply and demand dynamics, Leader or laggard status, Institutional sponsorship, and Market direction. The approach combines rigorous fundamental checks with technical confirmation, expecting that the best-performing stocks will show rising profits, strong sales, and relative price strength, all while the broader market trend supports the move.
We applied a CAN SLIM-inspired stock screener to the U.S. market and identified General Electric (NYSE:GE). The company, a major player in aerospace and defense, currently fits several key criteria that CAN SLIM investors seek. Below we break down why GE is making the grade in this screening process.
Recent Performance and Technical Strength
CAN SLIM places heavy emphasis on technical confirmation alongside fundamentals. The “L” in the acronym stands for “Leader or Laggard,” measured by relative strength. GE’s ChartMill Relative Strength (CRS) stands at 89.16, meaning it outperforms 89% of all stocks in the market. This places it firmly in the “leader” category. The overall technical rating for the stock is a near-perfect 10 out of 10, with the short- and long-term trends both positive, and the stock currently trading near its 52-week high of $379.67. This combination of price momentum and relative strength is exactly what the system asks for: investors want stocks that are not just fundamentally sound but are already demonstrating market acceptance.
The “N” in CAN SLIM also considers new highs. GE is trading close to its 52-week peak, a signal that the stock is breaking out rather than lingering in a range. Volume is also strong, with an average daily turnover of nearly 6 million shares, providing the liquidity needed for institutional-sized trades.
Fundamental Criteria: Earnings, Sales, and Growth
The “C” and “A” of CAN SLIM focus on current and annual earnings growth. GE meets both thresholds with room to spare. Its quarterly earnings per share (EPS) growth, comparing the last quarter to the same quarter last year, stands at 24.83%, well above the 20% minimum the screener used. Similarly, sales (revenue) growth over the same period is 29.03%, exceeding the 25% threshold. On an annual basis, the company’s 3-year EPS compound annual growth rate is 28.45%, again clearing the 25% bar set by the screener. This demonstrates that the growth is not a one-quarter fluke.
Return on equity (ROE), a key profitability metric in the “A” component, is a stellar 47.79%. This is far above the 10% minimum used in the screen and indicates that the company is efficiently generating profits from shareholder equity. The full fundamental analysis report confirms this strength: GE scores 8 out of 10 for profitability, with top-quartile profit margins and strong operating margins.
Financial Health and Valuation
While CAN SLIM does not demand a pristine balance sheet, it does look for manageable debt. The “S” (Supply and Demand) component suggests a preference for lower debt-to-equity ratios. GE’s debt-to-equity ratio is 1.01, which, while not ultra-low, is comfortably below the 2.0 maximum set in our screen. Additionally, institutional ownership sits at 80.88%, below the 85% cap, ensuring there is still room for new institutional buyers to enter—a key aspect of the “I” criterion.
Valuation, however, is a more subtle area. The technical analysis report gives GE a top 10 out of 10 rating, reflecting its strong trend and momentum. But on the valuation side, the FA report scores only 3 out of 10, with a price-to-earnings ratio of 55.36 and a forward P/E of 41.71. This is expensive compared to the broader market. In CAN SLIM, a high P/E can be justified if the growth trajectory supports it—GE’s expected earnings growth of 14.30% annually and revenue growth of 9.72% over the next few years provide some support. The combination of strong margins and accelerating revenue growth (turning from negative to positive) is a positive “evolution” factor.
Summary and Next Steps
GE presents a mixed but appealing profile for the CAN SLIM investor. It performs well on profitability, technical momentum, and relative strength, meeting the majority of the screener’s fundamental filters. Its expensive valuation is the primary concern, but the growth rates and market leadership may offset this for those following a momentum-driven growth strategy.
If you want to explore other stocks that pass the same CAN SLIM-inspired screen, you can find the full list of qualifying candidates here. The screener dynamically updates with market data, giving you a current view of the stocks that meet these criteria.
Disclaimer: This article is for informational and educational purposes only and does not constitute investment advice. Always conduct your own due diligence before making any investment decisions.
Read full article here »