William O'Neil

Guide to Stock-Picking Strategies - CANSLIM

C = Current quarterly earnings per share - Earnings must be up at least 18-20%.

A = Annual earnings per share – These figures should show meaningful growth for the last five years.

N = New things - Buy companies with new products, new management, or significant new changes in industry conditions. Most importantly, buy stocks when they start to hit new price highs. Forget cheap stocks; they are that way for a reason.

S = Shares outstanding - This should be a small and reasonable number. CANSLIM investors are not looking for older companies with a large capitalization.

L = Leaders - Buy market leaders, avoid laggards.

I = Institutional sponsorship - Buy stocks with at least a few institutional sponsors who have better-than-average recent performance records.

M = Market Direction - The market will determine whether you win or lose, so learn how to discern the market's overall current direction, and interpret the general market indexes (price and volume changes) and action of the individual market leaders.

CANSLIM is great because it provides solid guidelines, keeping subjectivity to a minimum. Best of all, it incorporates tactics from virtually all major investment strategies. Think of it as a combination of value, growth, fundamental, and even a little technical analysis.

Remember, this is only a brief introduction to the CANSLIM strategy; this overview covers only a fraction of the valuable information in O’Neil’s book, "How to Make Money in Stocks". We recommend you read the book to fully understand the underlying concepts of CANSLIM.