CANSLIM� Explained
CANSLIM� Explained: "CANSLIM Stocks
How would you know they are poised for an explosive increase in value? It turns out William J. O�Neil pondered the same question. O�Neil is founder and publisher of Investor�s Business Daily, a stock market newspaper. O�Neil has been in the business of providing stock market data to institutional investors since the 1960s. In the course of that business, he created a database containing fundamental and price information on thousands of public companies. O�Neil had the wherewithal to do what you and I would love to do�find the significant attributes of the winners of the past before they took off. He used his massive database to find the 500 biggest gainers in the years 1953 � 1993. Companies like Texas Instruments, Home Depot, etc. Then he analyzed these winners to find the characteristics they had in common before they took off.
O�Neil published the results of his study in a book called 'How to Make Money in Stocks.' O�Neil believes he found the winning formula, the seven basic characteristics most stocks have before enormous price advances. He uses the C-A-N-S-L-I-M acronym to identify the necessary attributes."
CANSLIM Discussion Group
CANSLIM Discussion Group
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C - A - N - S - L - I - M
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CANSLIM is a philosophy of screening, purchasing, and selling common stock as described and developed by William O'Neil in his book "How To Make Money In Stocks".
In a nutshell, here is is a summary of CANSLIM (taken directly from Mr. O'Neil's book without permission):
C = Current quarterly earnings per share. They must be up at least 18-20%.
A = Annual earnings per share. They should show meaningfull growth for the last five years.
N = New. Buy companies with new products, new management, or significant new changes in their industry conditions. And most important, buy stocks as they initially make new highs in price. Forget cheap stocks -- they are usually cheap for a good reason.
S = Shares outstanding. They should be small or of reasonable number, not large capitalization, older companies.
L = Leaders. Buy market leaders, avoid laggards.
I = Institutional sponsorship. Buy stocks with at least a few institutional sponsors with better than average recent performance records.
M = The general market. It will determine whether you win or lose, so learn to interpret the daily general market indexes (price and volume chages) and action of the individul market leaders to determine the overall market's current direction.
