In Brief

This growth investing approach combines both fundamental and technical factors. It looks for growing and accelerating earnings and sales; high relative strength and the stock making a new high; support from leading institutions; plus the helping hand of a bull market.

Background to CAN SLIM®

O'Neil began his career on Wall Street and eventually founded an investment research firm, William O'Neil & Co., which publishes, among other things, Investor's Business Daily.  The “original” CAN SLIM® approach published in "How to Make Money in Stocks” is based on O’Neil’s analysis of 500 of the biggest stock market winners from 1953 to 1993, although the sample period has since been extended significantly.  O’Neil extended his analysis of past market winners to 600 companies and released new findings in the third edition in 2002, along with a fourth edition in 2009

O’Neill does not believe in value investing as he feels that stocks generally sell for what they are worth. He prefers to focus on companies that are still in a stage of earnings acceleration before they make major price advances. O'Neil has stated that the CAN SLIM® strategy is not "momentum investing", but rather that the system identifies companies with strong fundamentals— enjoying big earnings increases as a result of innovation — and encourages buying them when they emerge from price consolidation periods and before they advance dramatically in price.

Calculation/Definition of CAN SLIM® 

CAN SLIM® is an acronym used to describe the following characteristics of growth stocks. It's hard to do justice to O'Neill's writings using purely quantitative criteria but we have tried to set out some illlustrative screening metrics. 

Current earnings

O’Neil’s study revealed that winning stocks generally have strong quarterly earnings per share performance prior to their significant price run ups.

Illustrative Criteria:

  1. Last quarter/half EPS growth > or = 20%
  2. EPS, excluding one-offs, is positive for the current quarter/half
  3. Increased EPS in the current quarter/half versus same period last year
  4. In his latest edition, O’Neill specifies that same-quarter/half growth in sales should be > 25% or at least accelerating over the last three periods.
  5. At least one stock in same industry shows strong earnings growth in last quarter/half.  

Annual earnings

Winning stocks in O’Neil’s study had a steady and significant record of annual earnings in addition to…

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