[CANSLIM is an investment strategy created by William J. O’neil, the founder of Investors Business Daily, and the author of the book, How to Make Money in Stocks: A Winning System in Good Times and Bad.

CANSLIM is a growth stock investment strategy that was devised from the study of the 500 best performing stocks from the year 1953. The main point of this investment strategy is to detect and pick great stocks before they experience big increases in their prices.

The word CANSLIM stands for the seven major characteristics that from research are often present in a stock prior to it experiencing a major rise in its price. These characteristics are as follows:

C = Current Quarterly Earnings Per Share

These should be between 25 to 50 percent higher than the previous year.

A = Annual Earnings Per Share

The company should have experienced meaningful growth over the past five years. In this regard, the annual compounded growth rate should have been at a minimum from between 25 to 50 percent, or even greater, per year.

N = New Product/Service/Market/Management

The company should have recently experienced a change that will enable it to become successful. This change could be the introduction of a new product, service, or market, or a change in management.

S = Supply and Demand

All things being equal, a company that has a smaller volume of outstanding shares on the market than its competitor is more likely to experience a sharper increase in its share price. Also on a related note, companies that have higher percentages of their stocks owned by management are more likely to experience sharper price increases.

L = Leader

It is important to examine the performance of the stock in relation to the performance of the market as a whole. Research shows that the 500 highest performing stocks between the years of 1953 and 1990 averaged a relative price strength of 87 (on a scale of between 1 and 99) just before they experienced large increases in their prices.

I = Institutional Sponsorship

The company should have a few institutional investors. The recommended number should be between 3 and 10.

It must however be noted that a stock could be over-owned. In other words, it has too many institutional investors. When this happens, it means that it is already too late to invest in that stock.

M = Market

It is important to be very aware of the general direction of the market you are investing in. In other words, is it a bear market or a bull market? Even if you are correct about every other factor, if you are wrong about the direction of the market, you are likely to lose money.

Table of Contents

1. Introduction
2. Fundamental Analysis
3. Qualitative Analysis
4. Value Investing
5. Growth Investing
6. GARP Investing
7. Income Investing
8. CANSLIM
9. Dogs of the Dow
10. Technical Analysis 1
11. Technical Analysis 2
12. Technical Analysis 3
13. Technical Analysis 4
14. Jim Cramer’s Strategies
15. Warren Buffet’s Strategies
16. Intrinsic Value