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date 02 Nov 2008 | category Uncategorized | comments Comments (3)

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CANSLIM stock strategy

date 21 Oct 2008 | category Stock Strategy | comments Comments (0)

CAN SLIM is a growth stock investment strategy developed by William O’Neill, the co-founder of “Investor Business Dailly” / IBD. He described his strategy in the book How To Make Money In Stocks: A Winning System in Good Times or Bad, 3rd Edition . There are countless examples of this strategy’s success. The goal of the strategy is to discover leading stocks before they make major price advance. There are 7 components of CAN SLIM, which are:
C = Current earning per share. Current earning per share (EPS) must be up no less than 18-20% from the same period last year. For example, a company’s EPS for this year’s January-March must grow minimum 18%-20% from the same three month last year.
A = Annual earning. They should up 25% or more in each of the last three years.
N = New. The company should either be under new management, have new product or service. It also must have new stock price high.
S = Supply and demand. Find company with small outstanding stock.
L = Leader. Find a company that is leading the way or market leader. A stock’s Relative Price Strength Rating should be 80 or higher.
I = Institutioal sponsorship. The company must have institutioanal sponsorship like mutual fund companies.
M = Market trend. You must buy when the trend is up. Like increasing volume, and stock index going up.
Besides the seven characteristic, you also should cut all losses at no more than 7% or 8% below the buy price, to minimize losses.

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