According to Wikipedia: CANSLIM is "an acronym for an investment strategy based upon claimed common characteristics shared by best-performing stocks."

That strategy is embodied and elaborated in a book entitled How to Make Money in Stocks. William Oneil, the book's author, describes the essence and origins of the strategy succinctly in the preface:

How to Make Money in Stocks gives you a proven, simple, fact-based system called CANSLIM. The system consists of buying and selling rules derived from an extensive analysis of all the greatest winning stocks each year for the last half-century. All known fundamental and technical (price and volume) variables and facts were studied in exacting detail to determine what common characteristics occurred just before these super stocks had huge price increases and how these variables changed when the stocks topped and began substantial declines.

The variables which proved to have predictive power were grouped into seven categories that form the basis of the acronym:

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.

* A = Annual earnings. They should be up 25% or more in each of the last three years.

* 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.

* 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.

* 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.

* 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.

* 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.

Tag: CANSLIM