CANSLIM

CANSLIM

A mnemonic device for deciding which stocks to buy. It was developed by William O'Neil of Investor Business Daily. It breaks down as follows:

C: Current quarterly earnings per share. O'Neil advises buying stocks with recent, large increases in quarterly EPS.
A: Annual earnings. Companies with increases in annual earnings each year for five years are thought to be good stocks to buy.
N: New products, management, or events. Each of these is usually thought to be positive.
S: Supply and demand. Stocks with small supply and large demand usually increase significantly in price in a short period of time.
L: Leader or laggard. O'Neil argues that stocks that lead an industry are better than those that lag behind in price.
I: Institutional investors. A large number of institutional investors or a few institutional investors that own much of the stock are thought to be negative influences.
M: Market direction. It is thought to be a good sign when the major stock indices are increasing.