[CANSLIM] Earnings

From: Ian <ianstm@shaw.ca>
Subject: [CANSLIM] Earnings
Date: Sun, 28 Apr 2002 22:03:38 -0700

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Hi all:

I thought I would weigh in with one observation that arises from my personal
methodology: I start all of my daily mining by going through all the 'Ups'
earnings reports in IBD. I list the companies with strong revenue and EPS
growth in a little notebook of mine - filtering out most cyclicals, extreme
high historical valuations, and unusually low RS. For the last few quarters,
I have seen fairly slim picking. But in the last 2 weeks, the number of
entries in my book has swelled in comparison to both Q4 2001 and Q1 2001.

I also note that a full 80%+ of S&P 500 companies have beaten earnings
estimates this Q.

I have no idea what this will mean for either the mega-cap indexes , or the
micro/smallcaps that tend to inhabit my universe - but it tells me that
earnings, if not 'M', are unequivocally on the upswing.

As an off-topic aside, several years ago I read an interview with a
successful investor who has been in the US equity markets for decades. He
made the comment that he now times economic cycles based on the earnings of
EK - when Kodak's earnings start to tick up, then the economy is on the
upswing. I don't know if it is still relevant in the age of digital
photography, but I did find myself making a mental note last week when EK
came out with their pronouncement that Q1 2002 was their EPS bottom.


Finally, my universe of stocks finally took a hit Wed-Fri last week, (not
enough to lose all of the big gains of Mon-Tues, but it was the first sign
of panic selling since early February). I did end up lightening up a lot of
positions and raising cash - as it appears that even some of the strong
smallcaps are starting to be sucked into the selling.


Ian




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