Re: TOO (was:[CANSLIM] WebLinks)

From: "Katherine Malm" <kmalm@earthlink.net>
Subject: Re: TOO (was:[CANSLIM] WebLinks)
Date: Thu, 16 May 2002 11:29:26 -0500
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Patrick,

You've been reading my mind!! Couldn't agree with you more. Since really =
spending time getting to the heart of CANSLIM, I concluded that =
technical strength combined with minimum growth characteristics and an =
identifiable strategic advantage are the most important aspects. Here's =
how I go about finding the candidates in more specific terms:

"Must Have"
=3D=3D=3D=3D=3D=3D=3D=3D=3D
Minimum Technicals:
RS>=3D60 and <70 + RS rising--minimum starting point for watch list
RS>=3D70 (min at purchase)
Price >=3D -15% of 50dMA
Price >=3D 200 dMA
A/D =3D A, B, C (prefer A or B on purchase)
Minimum Fundamentals:
Forward growth rate >=3D15
Expected return based on Current Price, past profitability & EPS =
estimates >=3D return on AAA bonds (this from VectorVest, RV>=3D1 and a =
simple measure of risk/reward)
Cash Flow positive
"N" =3D identifiable strategic advantage that makes the stock and/or the =
industry a "L"eader with fuel for future growth
The last two can't be easily filtered, so require due diligence. (Cash =
flow is unreliable in stock screeners because you don't always know =
whether they are using fiscal, trailing 12 months, prior reported year, =
etc.)
Sound technical pattern on break out and/or pullback entry.

"Sorting/Elimination/Preference Criteria"
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D
Operating Cash flow nearly equal to EPS (a quick way to identify =
accounting red flags)
EPS and Revs growing (prefer >=3D20%, if a turnaround, at least 2 =
quarters of growth)
ROE (prefer >=3D17%)
D/E (prefer <=3D50%)
% Institutional ownership (prefer 10-40%)
At least one other stock that is a direct competitor or is in the same =
industry is also in similar technical shape (only exception is when the =
company's product/market is so unique that there is no obvious publicly =
traded competitor )
General industry strength (prefer the same RS requirements as with the =
stock--This acts more as a "draw your eye to strength" indicator for the =
above condition)
These last items I don't filter for, but the more of the minimums the =
stock meets, the more "points" the stock gets. All else being equal in =
the "must haves", this sorts the cream to the top of the list.

Katherine
  ----- Original Message -----=20
  From: Patrick Wahl=20
  To: canslim@lists.xmission.com=20
  Sent: Thursday, May 16, 2002 10:33 AM
  Subject: RE: TOO (was:[CANSLIM] WebLinks)


  It is a little hard sometimes, and as has been mentioned, most people =
practice=20
  some modified form of CANSLIM.  I've tried to see what the underlying =
idea is to=20
  the whole thing, and I think it gets down to a few things that make =
sense to me -

  -You want to time your buy so you get in when a stock is making a =
move, and you=20
  have a reasonable risk point if you are wrong.
  -You are looking for strong growth companies.
  -You are looking for something new, something that is a catalyst for =
strong and=20
  hopefully sustained growth in a company, like a new product, a new =
industry (see=20
  the internet, or the networking market of the early nineties as new =
industries).

  All the other stuff is somewhat peripheral, I think, guess there is =
room for argument=20
  there, but basically you want growth (a company executing well) and a =
company in=20
  a growing industry (the old expanding pie idea).  I guess I like the =
letters CANLM the=20
  best.

  On 16 May 2002 at 11:09, Duke Miller wrote:

  > Thanks Patrick and Tom.
  >=20
  > I'm narrowing my MUST criteria more as time goes on.  Got any darts =
you
  > want to sell me!?!?


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<DIV>Patrick,</DIV>
<DIV>&nbsp;</DIV>
<DIV>You've been reading my mind!! Couldn't agree with you more. Since =
really=20
spending time getting to the heart of CANSLIM, I concluded that =
technical=20
strength combined with minimum growth characteristics and an =
identifiable=20
strategic advantage are the most important aspects. Here's how I go =
about=20
finding the candidates in more specific terms:</DIV>
<DIV>&nbsp;</DIV>
<DIV>"Must Have"</DIV>
<DIV>=3D=3D=3D=3D=3D=3D=3D=3D=3D</DIV>
<DIV><EM>Minimum Technicals:</EM></DIV>
<DIV>RS&gt;=3D60 and &lt;70 + RS rising--minimum starting point for =
watch=20
list</DIV>
<DIV>RS&gt;=3D70 (min at purchase)</DIV>
<DIV>Price &gt;=3D -15% of 50dMA</DIV>
<DIV>Price &gt;=3D 200 dMA</DIV>
<DIV>A/D =3D A, B, C (prefer A or B on purchase)</DIV>
<DIV><EM>Minimum Fundamentals:</EM></DIV>
<DIV>Forward growth rate &gt;=3D15</DIV>
<DIV>Expected return based on Current Price, past profitability &amp; =
EPS=20
estimates &gt;=3D return on AAA bonds (this from VectorVest, RV&gt;=3D1 =
and a simple=20
measure of risk/reward)</DIV>
<DIV>Cash Flow positive</DIV>
<DIV>"N" =3D identifiable strategic advantage that makes the stock =
and/or the=20
industry a "L"eader with fuel for future growth</DIV>
<DIV>The last two can't be easily filtered, so require due diligence. =
(Cash flow=20
is unreliable in stock screeners because you don't always know whether =
they are=20
using fiscal, trailing 12 months, prior reported year, etc.)</DIV>
<DIV>Sound technical pattern on break out and/or pullback entry.</DIV>
<DIV>&nbsp;</DIV>
<DIV>"Sorting/Elimination/Preference Criteria"</DIV>
<DIV>=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D</DIV>
<DIV>Operating Cash flow nearly equal to EPS (a quick way to identify =
accounting=20
red flags)</DIV>
<DIV>EPS and Revs growing (prefer &gt;=3D20%, if a turnaround, at least =
2 quarters=20
of growth)</DIV>
<DIV>ROE (prefer &gt;=3D17%)</DIV>
<DIV>D/E (prefer &lt;=3D50%)</DIV>
<DIV>% Institutional ownership (prefer 10-40%)</DIV>
<DIV>At least one other stock that is a direct competitor or is in the =
same=20
industry is also in similar technical shape (only exception is when the=20
company's product/market is so unique that there is no obvious publicly =
traded=20
competitor )</DIV>
<DIV>General industry strength (prefer the same RS requirements as with =
the=20
stock--This acts more as a "draw your eye to strength" indicator for the =
above=20
condition)</DIV>
<DIV>These last items I don't filter for, but the more of the minimums =
the stock=20
meets, the more "points" the stock gets. All else being equal in the =
"must=20
haves", this sorts the cream to the top of the list.</DIV>
<DIV>&nbsp;</DIV>
<DIV>Katherine</DIV>
<BLOCKQUOTE=20
style=3D"PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; =
BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
  <DIV style=3D"FONT: 10pt arial">----- Original Message ----- </DIV>
  <DIV=20
  style=3D"BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: =
black"><B>From:</B>=20
  <A title=3Dpjwahl@attbi.com href=3D"mailto:pjwahl@attbi.com">Patrick =
Wahl</A>=20
  </DIV>
  <DIV style=3D"FONT: 10pt arial"><B>To:</B> <A =
title=3Dcanslim@lists.xmission.com=20
  =
href=3D"mailto:canslim@lists.xmission.com">canslim@lists.xmission.com</A>=
 </DIV>
  <DIV style=3D"FONT: 10pt arial"><B>Sent:</B> Thursday, May 16, 2002 =
10:33=20
  AM</DIV>
  <DIV style=3D"FONT: 10pt arial"><B>Subject:</B> RE: TOO (was:[CANSLIM] =

  WebLinks)</DIV>
  <DIV><BR></DIV>It is a little hard sometimes, and as has been =
mentioned, most=20
  people practice <BR>some modified form of CANSLIM.&nbsp; I've tried to =
see=20
  what the underlying idea is to <BR>the whole thing, and I think it =
gets down=20
  to a few things that make sense to me -<BR><BR>-You want to time your =
buy so=20
  you get in when a stock is making a move, and you <BR>have a =
reasonable risk=20
  point if you are wrong.<BR>-You are looking for strong growth=20
  companies.<BR>-You are looking for something new, something that is a =
catalyst=20
  for strong and <BR>hopefully sustained growth in a company, like a new =

  product, a new industry (see <BR>the internet, or the networking =
market of the=20
  early nineties as new industries).<BR><BR>All the other stuff is =
somewhat=20
  peripheral, I think, guess there is room for argument <BR>there, but =
basically=20
  you want growth (a company executing well) and a company in <BR>a =
growing=20
  industry (the old expanding pie idea).&nbsp; I guess I like the =
letters CANLM=20
  the <BR>best.<BR><BR>On 16 May 2002 at 11:09, Duke Miller =
wrote:<BR><BR>&gt;=20
  Thanks Patrick and Tom.<BR>&gt; <BR>&gt; I'm narrowing my MUST =
criteria more=20
  as time goes on.&nbsp; Got any darts you<BR>&gt; want to sell=20
me!?!?<BR></BLOCKQUOTE></BODY></HTML>

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