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Stock Picking Strategies - CANSLIM

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1Stock Picking Strategies - CANSLIM Empty Stock Picking Strategies - CANSLIM Tue Jun 21, 2011 4:44 pm

TortoizePlus

TortoizePlus
Manager - Equity Analytics
Manager - Equity Analytics

There are some stock picking strategies following other markets and some of them are applicable in CSE as well. Every investor has his own successful strategy when picking a counter. It may be a one or a combination of few. A detailed description on below summery of CAN SLIM methods can be found at http://www.investopedia.com/university/stockpicking/stockpicking7.asp.

CAN SLIM Method

C – Current Earnings

Pick a stock whose earnings per share (EPS) in the most recent quarter have grown at least 20% on a yearly basis on the same quarter last year.

A – Annual Earnings
Pick a stock which has shown an annual earnings growth (At least from last 2-3 years).

N – New
Pick a stock that has recently undergone a change, which is often necessary for a company to become successful, whether it is a new management team, a new product, a new market, or a new high in stock price.

S – Supply and Demand

It is easier for a smaller firm, with a smaller number of shares outstanding, to show outstanding gains. The reasoning behind this is that a large cap company requires much more demand than a smaller cap company to demonstrate the same gains.

L = Leader or Laggard
Go with market leaders that provide great gains to shareholders. Pick a stock which is relative price strength is at least 70.

I = Institutional Sponsorship
It suggests that a stock worth investing in has at least 3 to 10 institutional owners.

M = Market Direction


Anyone has experience to share on this? With post war economic development, it seems almost all the companies have shown a considerable growth in their earnings and hence we can ignore C and A in CSE. If you consider a long term investment market direction (M) is also in upward trend. Can we found stocks to match with N, S, L and I. Can we found illiquid young business that has a future potential? We may have to ignore large cap blue chip companies like SPEN, RICH and LOLC if we consider Supply and Demand (S). Do we have some picks from recent IPOs? Experts you can share your ideas…………………….

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