Stock Market Investors » Glossary of Stock Terms » What is CANSLIM?

What is CANSLIM?

CANSLIM investing carries some of the features of momentum investing with some further added to it. It was developed by William J. O'Neil and in his book "How to Make Money in Stocks". It represents a method of observing, buying and selling common stocks.

More than 500 stocks were picked by O'Neil through the use of a computer database. This was done over the period between 1953 and 1993. After making a thorough analysis of these stocks, O'Neil managed to identify seven characteristics that all of these stocks share. These traits are synthesized by the acronym CANSLIM.

Every criterion against which an investor should evaluate a stock is represented by a letter of the acronym. So, here are the seven common traits found by O'Neil:

C Current Quarterly Earnings per Share It is desirable that a major increase over the past year's same quarter is observed.
A Annual Earnings It is desirable that the company has an increase in its annual earnings over the past five years.
N New products, New management, New prices of higher level
S Supply and Demand Companies should be of a small market cap character and have high trading volume levels.
L Leader in the industry in which the company operates
I Institutional Sponsorship Even small amount can make a difference.
M Market Direction The trend should be of an upward character.
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