CANSLIM For UK Stocks & Shares
CANSLIM is an investment method created by the American Investor's Business Daily (IBD) owner, William O'Neil. It is used primarily to identify growth companies using fundamental and technical analysis to time trades to maximize profit.
The overall goal of the strategy is to identify companies before they make major price increases. It does this by first finding companies using fundamental analysis, and then identifying 'buy point' using technical analysis.
C - Current Quarterly Earnings Per Share.
William O'Neil says "Interim earnings per share should be up a major percentile - at least 25% to 50% or more - over the same period the previous year. The best companies might show earnings up 100% to 500% or more!".
Very few UK companies release quarterly earnings update, but they do provide interim (half-year) updates. ShareSense provides this information in a very simple and concise manner, with Interim financial figures easily obtainable, together with the % change from the previous year.
A - Annual Earnings Increase
William O'Neil says "Concentrate on stock with proven records of significant earning growth in each of the last three years plus strong recent quarterly improvements. Don't accept anything less".
N - New Products or Services
William O'Neil says "Search for companies that have developed important new products or services, or benefited from new management or new industry conditions. Then buy their stocks when they are emerging from price consolidation patterns and are close too, or actually making, new price highs".
S - Supply & Demand
William O'Neil says "Any size capitalization stock can be bought under the CAN SLIM method, but small-cap stocks will be substantially more volatile, both on the upside and the downside. Companies buying back their stock in the open market and companies showing stock ownership by management are preferred".
L - Leader or Laggard?
William O'Neil says "It seldom pays to invest in the laggard-stocks, even if they look tantalizingly cheap. Look for, and confine your purchases to, market leaders".
I - Institutional Sponsorship
William O'Neil says "Only buy stocks that have at least a few institutional sponsor with better-than-average recent performance records, and invest in stocks showing an increasing total number of institutional owners in recent quarters."
M - Market Direction
William O'Neil says "Learn to determine overall market direction by accurately interpreting the daily market indices' price and volume movements and the action of individual market leaders. The can determine whether you win big or lose".