CANSLIM - "MY" DEFINITION

Many new Delphi members ask for a definition of CANSLIM: CANSLIM is an acronym derived by William O'Neil, the founder of Investor's Business Daily (IBD) and Daily Graphs(DG), based on a 38 year study of the most successful stocks. Each letter of C-A-N-S-L-I-M represents a key ingredient that must be carefully analyzed to pick potential winners and avoid the losers. The method is based on several well-developed concepts by past stalwarts of the Stock Market, who were proponents of investing PRIMARILY in Small Growth Companies. The approach does not preclude large cap stocks, but the rewards are of necessity slower. You can learn all about the approach for a mere $10 by buying W. O'Neil's book, "How to Make Money in Stocks". Your local book store should be able to get it for you. Alternatively, buy a copy of Investor's Business Daily(IBD) at a newstand and you will see an advertisement of where to purchase it or call IBD's Investment Library at 1-800-733-8900. To whet your appetite a little, here are the factors addressed in CANSLIM:

"C" - Current Qtrly Earnings- need >50% Growth, last 2 Qtrs

"A" - Annual Earnings Growth- >25%, but higher is preferred

"N" - Look for companies with new products, new services, new management, and stocks close to new highs

"S" - Shares Outstanding should be between 5 to 25 Million

"L" - The stock should be a leader, not a laggard. This is measured by its Earnings Rank, its Relative Strength and its Group Strength. Ideally, each should be >80.

"I" - The % of Institutional Ownership ideally should be less than 15%, but up to 25% is acceptable at a late stage of a bull market for some of the more established Growth Stocks

"M" - The direction and momentum of the Market must be "up"

This last item, "M", is the most important factor in applying this system, as the method is based on "Buying High to go Higher". Such a process in herently leads to high risk along with high rewards. It is, therefore, a sharp tool that when used correctly can be very rewarding. However, the caution is that it can cut one to ribbons if you don'tk now what you are doing.

To those who have grown up with computers, it provides a balance between Fundamental & Technical Analysis; so you will find there are sound principles established relating to chart patterns which help to blunt some of the high risk by selecting stocks when they exhibit certain Technical characteristics. These "basing" patterns are well described in the book.

Beyond that, stay a while, read the notes, practice on paper first, and enjoy.

Note: "CAN SLIM (written CANSLIM here) is a registered trademark of William O'Neil and Co. The interpretations and opinions expressed herein are those of the author and not of William O'Neil and Co, or of any affiliated individual or organization.