Stock Picking Strategy – CANSLIM

CANSLIM is System for Selecting Stocks. It is created by William J.O’Neil, the founder of Investor’s Business Daily.

Each letter represents a key factor to look out for when looking to purchase stocks in a company.

C – current Quarterly earnings of a firm

– last Quarterly earnings have > 20% growth

A – annual earnings growth

– annual EPS growth of 25 to 50%

N – new product, service, management or new high in price level

S – supply and demand

– smaller firms with smaller number of shares < 25 mil

   – less shares means more movement

    Also, look out for re- purchasing which signals management confidence

L – leader or laggard

– relative price strength ~ 70%

– ΔP stock/ ΔIndex over the same period of time

I – institutional sponsorship

– ideally between 3 and 10 sponsors . If over-owned, be cautious

M – market direction

– uptrend/ under pressure/ correction

– invest in time of definite uptrend

– see Indices for trend