C-A-N-S-L-I-M

CANSLIM is a growth stock investment strategy based on a study of 500 of the stock market winners dating back to 1953 in the book How to Make Money in Stocks: A Winning System In Good Times or Bad, 3rd Edition (May 23, 2002) ISBN 0071373616. by William J. O'Neil . This strategy uses both technical analysis and fundamental analysis.

The goal of the strategy is to discover leading stocks before they make major price advances. These pre-advance periods are "buy points" that are emerging from price consolidation areas (or "bases") of at least 7 weeks on weekly price charts.

[edit] Components of CANSLIM

Each letter in CANSLIM stands for common characteristics which are claimed found in the greatest stock market leaders over the past 50 years:

• C = Current earnings per share. They must be up 18 to 20% or more. ^{[1] [2] [3] [4] [5] [6] [7] [8] [9] [10]}
• A = Annual earnings. They should be up 25% or more in each of the last three years. ^{[11] [12] [13] [14] [15] [16] [17] [18] [19] [20]}
• N = New. The company should either be under new management, have a new product, or have a new service. It should also have a new high for its stock price. ^{[21] [22] [23] [24] [25] [26] [27] [28] [29] [30]}
• S = Shares of common stock Outstanding:Keep it small. The price of a common stock with 300 million shares outstanding is hard to budge up because of the large supply of stock available. ^{[31] [32] [33] [34] [35] [36] [37] [38] [39] [40]}
• L = Leader or laggard? Within an industry, always choose the company that is leading the way, not one that is following in another's footsteps. ^{[41] [42] [43] [44] [45] [46] [47] [48] [49] [50]}

• I = Institutional sponsorship. Make sure large mutual fund companies (and other institutions) are investing in your stock - you can ride on their capital. Also, focus on the better performing institutions buying your stock. ^{[51] [52] [53] [54] [55] [56] [57] [58] [59] [60]}
• M = Market trends and market indices. Recognize the cup and handle pattern, as well as other market correction footprints. Know when a stock has peaked out. Also, buy stocks only when the Dow, S&P 500, and Nasdaq are going up. ^{[61] [62] [63] [64] [65] [66] [67] [68] [69] [70]}