Go to Jeff Salisbury LWGate Home Page.From: "Mike Gibbons" <mikegibbons@proactech.com>
Subject: RE: [CANSLIM] Canslim Evaluation tool
Date: Fri, 5 Apr 2002 07:21:49 -1000
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BlankHi Rich,
Thank you for your question. We tried to base the tool on the strict
definitions of CANSLIM as contained in HTMMIS, Ask Bill and the IBD Archives
(see below).
We didn't find any specific reference to rank within industry group, other
than "Focus on the top industry groups, and within those groups select
stocks with the best price performance". As price performance is already
covered by RS I didn't rate on the rank within industry. I reasoned that to
do so would add extra weight to price performance in the overall ranking -
that may or not be correct but I didn't have a rational basis for including
it.
(The whole issue of what weight to put on each letter would perhaps be an
interesting debate.)
As for any definition of how many institutions is too many, we just didn't
know how to handle that one. What we found was "You want at least a few of
the better performing mutual funds owning the stock". That was just too
subjective for us to quantify, so we ignored the number of institutions and
stuck with the % of institutional ownership. Even there we couldn't find a
clear definition and used our judgement that 5-50% was probably in the
spirit of WON.
If you or any list members can help me further with these definitions, then
I'd be happy to modify the tool to incorporate them.
Our primary source was:
Friday, July 27, 2001
"What are the CAN SLIM criteria you mention sometimes?"
- Submitted from Toms River, N.J.
CAN SLIM is an acronym that describes the seven common
characteristics of stocks we found in our research of some of the greatest
stocks over the past 50 years, before each of these stocks made their huge
price gains. This is what each letter represents: C - Current earnings must
be strong. We look for earnings per share growth of at least 25% in the most
recent quarter, or an acceleration in recent earnings growth, or both. Also,
the latest three quarters of sales growth should be a minimum of 25%.
Otherwise, sales growth should be accelerating. A - Strong annual earnings
growth. We look for annual earnings growth for the last three years of 25%
or greater. Also, return on equity should be at least 17%, and pretax profit
margins should be increasing. N - New products, services or leadership. If a
company has a dynamic new product or service, or is capitalizing on new
conditions in the economy, this can have a dramatic impact on the price of a
stock. Also, buy stocks just as they emerge from a sound "base" pattern and
make new price highs. S - Supply and demand. Watch the demand for shares by
looking at the percentage change in volume for each of your stocks. Analyze
a stock's daily and weekly price and volume changes. L- Look for leading
stocks in leading industry groups. Nearly 50% of a stock's price action is a
result of its industry group's performance. Focus on the top industry
groups, and within those groups select stocks with the best price
performance. The stock's Relative Price Strength Rating should be in the 80s
or 90s. I - Institutional sponsorship. You want at least a few of the better
performing mutual funds owning the stock. They're the ones who will drive
the stock up on a sustained basis. M - Market direction should be positive.
You can buy the best stocks, but if the general market is weak, most likely
your stocks will be weak also. You need to study IBD's General Market &
Sectors page and learn how to interpret shifts in the market's trend.
Aloha,
Mike Gibbons
Proactive Technologies, LLC
http://www.proactech.com
-----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com]On Behalf Of Rich W
Sent: Friday, April 05, 2002 3:57 AM
To: canslim@lists.xmission.com
Subject: [CANSLIM] Canslim Evaluation tool
Mike,
Your site that you gave us to check stocks for Canslim ranking is great,
but pardon me if this was asked before
Why you do not have rated the multex rank within the Industry group, like
over 50 is a pass, under 50 fail??
and the number of Institutions is not rated, yes this is a hard one to
rate, but if too many on in the stock, would
that not be a fail, and under some amount (again hard to rank) be a pass,
or is this left to each of us to do our
ranking, and again thanks for the tool.
Went to the main site and is loaded with a lot of great reading, need some
time to get into
Rich W
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<DIV><SPAN class=3D670515216-05042002>Hi Rich,</SPAN></DIV>
<DIV><SPAN class=3D670515216-05042002></SPAN> </DIV>
<DIV><SPAN class=3D670515216-05042002>Thank you for your question. =
We tried=20
to base the tool on the strict definitions of CANSLIM as contained in =
HTMMIS,=20
Ask Bill and the IBD Archives (see below).</SPAN></DIV>
<DIV><SPAN class=3D670515216-05042002></SPAN> </DIV>
<DIV><SPAN class=3D670515216-05042002>We didn't find any specific =
reference to=20
rank within industry group, other than "Focus on the top industry =
groups, and=20
within those groups select stocks with the best price performance". As =
price=20
performance is already covered by RS I didn't rate on the rank within =
industry.=20
I reasoned that to do so would add extra weight to price performance in =
the=20
overall ranking - that may or not be correct but I didn't have a =
rational basis=20
for including it.</SPAN></DIV>
<DIV><SPAN class=3D670515216-05042002></SPAN> </DIV>
<DIV><SPAN class=3D670515216-05042002>(The whole issue of what weight to =
put on=20
each letter would perhaps be an interesting debate.)</SPAN></DIV>
<DIV><SPAN class=3D670515216-05042002></SPAN> </DIV>
<DIV><SPAN class=3D670515216-05042002>As for any definition of how many=20
institutions is too many, we just didn't know how to handle that one. =
What we=20
found was "You want at least a few of the better performing mutual funds =
owning=20
the stock". That was just too subjective for us to quantify, so we =
ignored the=20
number of institutions and stuck with the % of institutional ownership. =
Even=20
there we couldn't find a clear definition and used our judgement =
that 5-50%=20
was probably in the spirit of WON.</SPAN></DIV>
<DIV><SPAN class=3D670515216-05042002></SPAN> </DIV>
<DIV><SPAN class=3D670515216-05042002>If you or any list members can =
help me=20
further with these definitions, then I'd be happy to modify the tool to=20
incorporate them. </SPAN></DIV>
<DIV><SPAN class=3D670515216-05042002></SPAN> </DIV>
<DIV><SPAN class=3D670515216-05042002>Our primary source =
was:</SPAN></DIV>
<DIV><SPAN class=3D670515216-05042002></SPAN> </DIV>
<DIV><SPAN class=3D670515216-05042002>
<TABLE border=3D0 cellPadding=3D0 cellSpacing=3D0 width=3D"80%">
<TBODY>
<TR>
<TD vAlign=3Dtop><FONT face=3DArial><FONT size=3D2><SPAN =
class=3Dtxtsub>Friday,=20
July 27, 2001 </SPAN><BR> </FONT></FONT></TD></TR>
<TR>
<TD class=3Dcopy vAlign=3Dtop><FONT face=3DArial size=3D2><IMG =
align=3Dleft border=3D0=20
height=3D25 src=3D"http://www.investors.com/images/staQ.gif" =
width=3D38> "What=20
are the CAN SLIM criteria you mention sometimes?"</FONT></TD></TR>
<TR>
<TD align=3Dright class=3Dcopy vAlign=3Dbottom><FONT =
face=3DArial><FONT=20
size=3D2><B><I>- Submitted from Toms River,=20
N.J.</B></I></FONT></FONT></TD></TR>
<TR>
<TD class=3Dcopy vAlign=3Dtop><FONT face=3DArial><FONT =
size=3D2> <BR><IMG=20
align=3Dleft border=3D0 height=3D25=20
src=3D"http://www.investors.com/images/staA.gif" width=3D38> CAN =
SLIM is an=20
acronym that describes the seven common characteristics of stocks =
we found=20
in our research of some of the greatest stocks over the past 50 =
years,=20
before each of these stocks made their huge price gains. This is =
what each=20
letter represents: <B>C - Current earnings</B> must be strong. We =
look for=20
earnings per share growth of at least 25% in the most recent =
quarter, or=20
an acceleration in recent earnings growth, or both. Also, the =
latest three=20
quarters of sales growth should be a minimum of 25%. Otherwise, =
sales=20
growth should be accelerating. <B>A - Strong annual earnings =
growth.</B>=20
We look for annual earnings growth for the last three years of 25% =
or=20
greater. Also, return on equity should be at least 17%, and pretax =
profit=20
margins should be increasing. <B>N - New products, services or=20
leadership.</B> If a company has a dynamic new product or service, =
or is=20
capitalizing on new conditions in the economy, this can have a =
dramatic=20
impact on the price of a stock. Also, buy stocks just as they =
emerge from=20
a sound "base" pattern and make new price highs. <B>S - Supply and =
demand.</B> Watch the demand for shares by looking at the =
percentage=20
change in volume for each of your stocks. Analyze a stock's daily =
and=20
weekly price and volume changes. <B>L- Look for leading stocks in =
leading=20
industry groups.</B> Nearly 50% of a stock's price action is a =
result of=20
its industry group's performance. Focus on the top industry =
groups, and=20
within those groups select stocks with the best price performance. =
The=20
stock's Relative Price Strength Rating should be in the 80s or =
90s. <B>I -=20
Institutional sponsorship.</B> You want at least a few of the =
better=20
performing mutual funds owning the stock. They're the ones who =
will drive=20
the stock up on a sustained basis. <B>M - Market direction should =
be=20
positive.</B> You can buy the best stocks, but if the general =
market is=20
weak, most likely your stocks will be weak also. You need to study =
IBD's=20
General Market & Sectors page and learn how to interpret =
shifts in the=20
market's trend. =
</FONT><BR> </FONT></TD></TR></TBODY></TABLE></SPAN></DIV>
<DIV> </DIV>
<DIV>Aloha,</DIV>
<DIV> </DIV>
<DIV>Mike Gibbons<BR>Proactive Technologies, LLC</DIV>
<DIV><A =
href=3D"http://www.proactech.com/">http://www.proactech.com</A></DIV>
<BLOCKQUOTE style=3D"MARGIN-RIGHT: 0px">
<DIV align=3Dleft class=3DOutlookMessageHeader dir=3Dltr><FONT=20
face=3DTahoma>-----Original Message-----<BR><B>From:</B>=20
owner-canslim@lists.xmission.com=20
[mailto:owner-canslim@lists.xmission.com]<B>On Behalf Of </B>Rich=20
W<BR><B>Sent:</B> Friday, April 05, 2002 3:57 AM<BR><B>To:</B>=20
canslim@lists.xmission.com<BR><B>Subject:</B> [CANSLIM] Canslim =
Evaluation=20
tool<BR><BR></DIV></FONT>
<DIV>Mike,</DIV>
<DIV>Your site that you gave us to check stocks =
for =20
Canslim ranking is great, but pardon me if this was asked before</DIV>
<DIV>Why you do not have rated the multex rank within the Industry=20
group, like over 50 is a pass, under 50 fail??</DIV>
<DIV>and the number of Institutions is not rated, yes this is a hard =
one to=20
rate, but if too many on in the stock, would</DIV>
<DIV>that not be a fail, and under some amount (again hard to =
rank) be a=20
pass, or is this left to each of us to do our</DIV>
<DIV>ranking, and again thanks for the tool.</DIV>
<DIV>Went to the main site and is loaded with a lot of great reading, =
need=20
some time to get into</DIV>
<DIV>Rich W</DIV>
<P> </P></BLOCKQUOTE></BODY></HTML>
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