Go to Jeff Salisbury LWGate Home Page.From: Ssingh@aol.com
Subject: [CANSLIM] canslim, WON and JKHY-info forwarded
Date: Sun, 20 Sep 1998 19:05:06 EDT
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JKHY was added to the active CANSLIM board Friday(09/18/98).
Chuck
COMPANY:------------------------------------------------Jack Henry & Assoc Inc
STOCK SYMBOL:----------------------------------------JKHY
EXCHANGE:-----------------------------------------------NASDAQ
CURRENT PRICE:-----------------------------------------45.00
COMPANY PROFILE:------------------------------------Develops markets and
supports turnkey in-house data processing systems software products which
improve productivity.
OUTSTANDING SHARES:-------------------------------20m
EPS RANK:------------------------------------------------97
RELATIVE STRENGTH RANK:-------------------------98
ACCUMULATION/DISTRIBUTION RANK:------------B
SPONSORSHIP RANK:----------------------------------D
GROUP STRENGTH RANK:-----------------------------A
DEBT PERCENTAGE:------------------------------------0
MANAGEMENT OWNERSHIP PERCENTAGE:-------38
RETURN OF EQUITY PERCENTAGE:-----------------+34.9
PE RATIO:-------------------------------------------------39
THREE YEAR ANNUAL GROWTH RATE:------------+32%
LAST QUARTER EPS:----------------------------------+68%
PRIOR QUARTER EPS:---------------------------------+35%
LAST QUARTER SALES:------------------------------+86%
PERCENT ABOVE 10-WEEK AVERAGE PRICE:----+12
TWO YEAR HIGH:----------------------------------------47.38
TWO YEAR LOW:----------------------------------------17.50
Results of the CANSLIM and CANSLIM POTENTIAL active board after close
Friday(09/18/98).
Chuck
CANSLIM(+6.1%)
SYMBOL PICKED & PRICE PRESENT EPS RS 10 WEEK A/D
JKHY 09/18/98 45.00 47.75 97 98 +12
B
CANSLIM POTENTIAL(picked when within 15% of NH))+21.8%)
SYMBOL PICKED & PRICE PRESENT EPS RS 10 WEEK A/D
LGTO 09/01/98 40.00 48.75 99 99 +18
A
With CANSLIM and CANSLIM POTENTIAL (within 15% of new high), stocks are
usually picked when they reach a New High(NH) along with meeting the other
criteria. They are sold when they fall 8% from their highest closing price or
going 20% above the buying price. Of course, it is not sold if the stock is
on a good incline. General guidelines are:
COMPANY:------------------------------------------------Usually an American
company
EXCHANGE:-----------------------------------------------NYSE or NASDAQ
usually
CURRENT PRICE:----------------------------------------over $15
COMPANY PROFILE:-----------------------------------Should be on the boards
for at least two years and in one of the leading industries.
OUTSTANDING SHARES:------------------------------5m-40m
EPS RANK:----------------------------------------------->87
RELATIVE STRENGTH RANK:------------------------>87
ACCUMULATION/DISTRIBUTION RANK:-----------Usually A, sometimes B
SPONSORSHIP RANK:---------------------------------A or B
GROUP STRENGTH RANK:----------------------------Usually A, sometimes B
DEBT PERCENTAGE:-----------------------------------<35
MANAGEMENT OWNERSHIP PERCENTAGE:------usually 25-50
RETURN OF EQUITY PERCENTAGE:----------------->20 usually
PE RATIO:----------------------------------------------->15 but depends on
industry
THREE YEAR ANNUAL GROWTH RATE:------------>+25%
LAST QUARTER EPS:---------------------------------->+70%
PRIOR QUARTER EPS:--------------------------------->+25% usually
LAST QUARTER SALES:------------------------------>+25% usually
PERCENT ABOVE 10-WEEK AVERAGE PRICE:----anywhere on the + side
VOLUME--------------------------------------------------Usually above the
10 week average.
- ------------------------------------------------------------------------------
- ---------------------
Q&A With William O'Neil
Q&A With William O'Neil
How To Buy At Just The Right Moment
Last week, William O'Neil began his discussion of how to spot sound price
patterns, such as the ''cup with handle.''
In this installment, IBD's chairman and founder looks at other common
bases. Why are they so important? Quality stocks typically form these same
patterns before they go on to make big gains.
Q:When did you realize the importance of reading charts?
O'Neil: I first discovered how critical charts were in 1959, one year
after I became a stockbroker. At that time, there was one specific mutual fund
that happened to be outperforming all others. I got a weekly chart book and
posted from prospectuses and quarterly reports where, price-wise, the fund
purchased every new stock during the prior two years. I discovered something
very important.
What I learned was so startling, it simply changed my whole view about how
to pick winning stocks. Every single one of the approximately 100 new stocks
the fund purchased was bought only after it bolted into new high ground in
price! For example, if a stock had fluctuated back and forth between $40 and
$50 for three to six months, this No. 1 fund only bought when the stock made a
new high at $51.
Now let's stop and think about this concept for a moment. This idea of buying
a stock at the highest price it has ever sold as it is coming out of a correct
basing area (I talked about one common pattern, the ''cup with handle'' last
week) seems ludicrous. After all, most of us were raised with the idea of
getting a deal, a bargain. I'm here to shatter a common and comfortable
misconception.
What applies to buying a car or a dress works in the completely opposite way
when dealing with stocks. You want stocks that have the greatest potential of
moving even higher. So, you've got to ignore the erroneous old saying, ''buy
low and sell high,'' and replace it with ''buy high and sell a lot higher.''
It's all a matter of perspective. Look back at a huge winner like Cisco
Systems.csco From its original new-high pivot point of $30 in October '90
through today, it has increased an incredible 15,596%. The original pivot
point
was actually low. It simply seemed high because its price history was all that
was known at that time. The incredible gains to come were not yet visible.
Q:What are some other price patterns that emerge before stocks take off?
O'Neil: In addition to the common ''cup with handle'' pattern, see page A5
for an
example of a ''double bottom'' chart pattern with American Power
Conversion.APCC
American Power's 39-week pattern looks like a large letter ''W.'' The midpoint
of the W at C should be below the high at point A, the beginning of the
pattern. A to B is the first bottom in the letter W, B to C is the midpoint
and C to D represents the second leg down and second bottom in the W.
Normally, the second leg down will drop slightly below the absolute low of the
first bottom at point B. This serves as a shakeout and helps scare out the
last few weak holders. D to E is the last leg up in the W and E, F, and G
forms a short handle.
The correct buy point is at $22 at point G as the stock breaks through the
peak price of the handle (point E). Note the high increase in weekly trading
volume at the bottom of the chart when the stock moves up.
The stock at the buy point had an Earnings Per Share rank of 99, a Relative
Price Strength of 95, a return on equity of 53.8% and a 25% pretax profit
margin. It advanced 800% in the following 22 months from point G, which at
that time must have looked very high and scary. Notice also the big volume on
the price run up from $18 to $22 at point C.
One last observation: The last three weeks of December and the first week in
January, the stock closed in a very tight range around $17 and the volume
dried up to the lowest level in the entire base. Most people will never spot
this, but it is usually a sign of professional accumulation (buying).
Q:Any other price patterns to look for?
O'Neil: Another common base is the flat base. It usually occurs after a stock
has
formed a ''cup with handle'' and has then continued to move up. Simply, the
price pattern moves straight sideways and holds tight for at least five weeks
and normally only corrects 8% to 12%. At the end of this type of pattern, a
new pivot point is established, giving you an additional chance to buy.
You want to buy a stock exactly at its pivot buy point as it breaks out of a
sound pattern. Don't chase it up more than 5% past its pivot. If you do, you
will be buying ''extended'' and your risk of being shaken out on a normal
price correction or pullback will increase.
Q:What are some mistakes you can make in reading charts, and are there
''faulty'' base patterns?
O'Neil: 1. Short bases of one, two, three or four weeks in duration are very
risky
and usually fail avoid them.
2. Patterns that are abnormally wide or loose in overall appearance are more
risky. It's safer to buy tighter, better contained patterns with less wild
price fluctuations.
3. Stocks that shoot up straight from the bottom of a pattern into new highs
without any pullbacks or handles are risky and frequently have sharp sell-
offs.
4. A base breakout with no real increase in volume should be avoided.
5. Laggard bases. The last stock in a group to break out to a new high is weak
and a laggard. It should be passed up.
6. Handle areas that are too wide and loose (down 20% to 30%) or handles that
wedge upward along their lows rather than drifting down along the lows are
faulty and frequently may fail. Once you learn to read a chart book and
correctly recognize stocks with sound base patterns that are under
accumulation (professional buying) and possess all of the fundamental earnings
criteria we mentioned early in this series, your stock selection and
performance should improve significantly. Next week, I will explore a list of
important rules regarding charts I've learned through the years.
Looking for a previous installment of William O'Neil's series: ''26 Weeks To
Investment Success''? Just log on to to the World Wide Web and point your
browser to www.investors.com.
- -
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