The CANSLIM methodology was developed by a renowned US investor named William J. O’Neil. This methodology depicts the common properties of the stocks that have performed extraordinarily in the past 125 years on the stock market. O’Neil examined the most highly performing stocks in the market, gathered their common properties, and coined the term ‘CANSLIM’ for them. 

Let’s have a look at the meaning of each letter in ‘CANSLIM’:

C: Current Quarterly Earnings

Pick stocks that have performed exceptionally well in their latest quarter. The bigger the stock, the better it is to pick.

A: Annual Earnings Growth

Choose stocks that have consistently shown at least 25% growth in the last three years.

N: New Product, Service, Management or Price High

If a stock has something new, it ought to be a great player. This includes new products, new services, new leadership, new price highs, or a new condition in the industry.

S: Supply and Demand

A stock that fulfils the law of supply and demand is mostly a good stock market player.

L: Leader or Laggard

A company with a significant growth rate, strong sales, superior performance, and industry-leading will likely be a great player.

I: Institutional Sponsorship

Mutual funds, banks, and other professional investors are considered good players in the market.

M: Market Direction

Trading in sync with the market is what history suggests to us. It has been noticed that 3 out of 4 stocks follow the market trend, so go with the flow.