I’ve discussed various portions of an investment plan in my recent blogs. We’ve discussed “how and when to buy stocks”, “how to protect yourself” and “when to take profits”. Now, let’s talk about stock selection. Stock selection is a set of criteria you set up to know which stocks to buy. William O’neal and the IBD have researched this topic extensively to find out which stocks have performed best over a certain period of time and what were their common characteristics. Their method is called CAN SLIM®. If you are looking for growth in your portfolio then the CAN SLIM® criterea is an excellent place to start.
What is CAN SLIM®?
CAN SLIM® is IBD’s checklist for the seven common characteristics all great performing stocks have before they make their biggest gains. You can significantly reduce your risk and increase returns by using the CAN SLIM® Investment Research Tool as a fact-based performance checklist to evaluate a stock before you buy.
C = Current earnings per share should be up 25% or more and in many cases accelerating in recent quarters. Quarterly sales should also be up 25% or more or accelerating over prior quarters. Learn more…
A = Annual earnings should be up 25% or more in each of the last three years. Annual return on equity should be 17% or more. Learn more…
N = A company should have a new product or service that’s fueling earnings growth. The stock should be emerging from a proper chart pattern and about to make a new high in price. Learn more…
S = Supply and demand. Shares outstanding can be large or small, but trading volume should be big as the stock price increases. Learn more…
L = Leader or laggard? Buy the leading stock in a leading industry. A stock’s Relative Price Strength Rating should be 80 or higher. Learn more…
I = Institutional sponsorship should be increasing. Invest in stocks showing increasing ownership by mutual funds in recent quarters. IBD’s Accumulation/Distribution Rating gauges mutual fund activity in a stock. Learn more…
M = The market indexes, the Dow, S&P 500 and Nasdaq, should be in a confirmed up trend since three out of four stocks follow the market’s overall trend. Learn more…
For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436
advisors@allgenfinancial.com
www.allgenfinancial.com
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