Canlsim

What is CANSLIM?

CAN SLIM was introduced by William J. O’ Neil who is also the author of the book How to Make Money in Stocks - A Winning System in Good Times or Bad. Each letter in the word CANSLIM stands for one of the seven characteristics that are commonly found in the most successful stocks. In the following paragraph I will explain each letter in more detail.

C stands for Current Big or Accelerating Quarterly Earnings and sales per share. He suggests that one should seek a stock that has huge current earnings increase. The earnings per share is calculated by dividing a company’s total after-tax profits by the number of shares outstanding. This is one of the most important elements in selecting a stock. The higher the number the better it is. To get an accurate result one should always compare a company’s earnings per share to the same quarter a year earlier and not the previous quarter, this will avoid any misrepresentation that could have caused by something arbitrary in that quarter. William O’ Neil recommends buying stocks that shows Earnings per share at least 25% to 50% in the recent quarter versus the same quarter a year ago. One should not only look at increasing EPS, high Earnings per share should be supported by high sales this shows sustainability in the company and not just a company exaggerated EPS by lowering the cost spending less on ads.

A stands for Annual Earnings Increases. He suggests that the company you choose should have 25%, 50% or even 100% or more earnings growth. Stability and consistency of annual earnings growth over the past three years has proven important in selecting high growth stock. The stability measurement is expressed on scale 1 to 99, the lower the number, the more stable the past earnings.

N= new companies, new products, new management, It takes something new to happen for the stock price to rise. It is recommended to search for companies that have developed new products or services or a company that just got...