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- 50%

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

S – supply and demand – smaller firms with smaller # shares < 25 mil

    – less #, more movement.

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

L – leader or laggard – relative px strength ~ 70% – ΔP stock/ ΔIndex over the same period of time

I – institutional sponsorship – ideally between 3 and 10 sponsors – over-owned, be cautious

M – market direction – uptrend/ under pressure/ correction – invest in time of definite uptrend – see Indices