CAN SLIM Investment System
CAN SLIM® Investment System
Acronym for investment system developed by MarketSmith founder, William J. O'Neil. The CAN SLIM® Investment System is based on the seven common characteristics found in his study of the greatest stock market winners of the last 45 years and is detailed in Mr. O'Neil's book, How to Make Money in Stocks.
C = Current Earnings Growth
A = Annual Earnings Growth
N = New Products, New Services, New Management, New Price Highs
S = Supply & Demand
L = Leader or Laggard
I = Institutional Sponsorship
M = Market
Corporate Event
Abbreviation of a corporate event will appear near the price line with an arrow indicating the date it occurred.
- ASE = Date stock switched to listed exchange
- CO = Cash offer
- IPO = Initial public offering
- NEW = New issue and price
- PM = Proposed merger
- PO = Primary offer
- PPO = Proposed primary offering
- PSO = Proposed secondary offering
- PSOF = Partial spin-off
- REORG = Reorganization
- SDIS = Stock distribution
- SO = Secondary offer
- SOF = Spin-off
- TO = Tender offer
- $DIS = Cash distribution
Denotation Marks
Marks, symbols, and characters presented on the graphs indicate additional meaning or significance.
* - A blue asterisk next to Fiscal Quarter date indicates quarterly earnings were reported within the last 15 calendar days.
* - A red asterisk next to EPS Due indicates earnings expect to be reported within the next 4 weeks. Date shown reflects reported date of same quarter in previous year.
* - A red asterisk to the left of the Daily chart volume scale indicates at least one of the following statements are true:
- Volume was at its highest level in the last 52-weeks; or
- Volume was at least 100% greater than its 50-day average volume.
%XA9 - A copyright symbol indicates the company has convertible issues (bonds, preferreds or options).
# - A pound sign in the Quarterly Sales/EPS Data Box, next to the EPS % change item, denotes figure is based on an absolute difference (the comparison quarter figure is negative).
A blue triangle to the right of the EPS figure in the Six-Year Annual Earnings Data Box, denotes pre-tax, non-recurring item(s) could not be excluded from the final EPS figure.
A blue triangle to the right of the EPS figure in the Quarterly Sales/EPS Data Box, denotes pre-tax, non-recurring item(s) could not be excluded from the EPS figure.
A colored triangle to the right of the Annual Earnings Estimates (Weekly chart) indicates annual earnings estimates were revised from our previously published consensus earnings estimate. This colored triangle updates overnight after Friday's close.
- An upward pointing green triangle indicates an increase in the EPS estimate.
- A downward pointing red triangle indicates a decrease in the EPS estimate.
(w) - Indicates the company has warrants outstanding.EPS Growth Rate, 3-5 Year
This item is calculated by using a least squares regression fit over a 3-to-5 year period of earnings per share based on a trailing four-quarter count. For example, if a stock is currently in its second quarter, the first period used in this calculation will consist of the sum of Q2 + Q1 (of the current fiscal year) plus Q4 +Q3 (of the prior fiscal year). Each successive period will be based on the next trailing four quarters of earnings per share.
The amount of time used to calculate the Growth Rate is based on two factors:
- Availability of data
- Positive earnings
If a stock does not have at least three years of positive earnings (based on the trailing four-quarter method noted above), an "N/A" will appear.
The amount of time used for this calculation will consist of at least three years but no more than five years of positive earnings per share. If a four-quarter period sum is negative, that period and additional earnings further back in time, will not be used in the calculation of this data item.
Flat Base
One of three positive chart patterns to look for when doing technical analysis. It usually occurs after a stock has advanced off of a 'cup with handle' or 'double bottom' pattern. The 'flat base' moves straight sideways in a fairly tight price range for at least five weeks and does not correct more than 8% to 12%.
Pivot Point (Buy Point)
Optimal buy point of a stock as it emerges from a sound and proper basing area or chart pattern (the most common of which include the 'cup with handle,' 'flat base' and 'double bottom') and breaks out into a new high in price. This is the point of least resistance and has shown, through William J. O'Neil's research, to have the greatest chance of moving substantially higher based on its current and historical price and volume activity.
Price/Earnings (P/E) Ratio
Theoretically measures the value of a stock by dividing the current price by its earnings per share over the last twelve months. When a stock's P/E ratio is high, it is considered by the majority of investors to be pricey or overvalued. Stocks with low P/Es are typically considered a good value. However, through his studies of the biggest stock market winners, William J. O'Neil found the opposite to be true: the higher the P/E, the better the stock. The average P/E of the best winners over the last fifteen years at the initial buy point prior to their huge price increases was 31 times earnings. These P/Es went on to expand more than 100% to over 70 times earnings as the stocks significantly increased in price.
Price/Earnings (P/E) Ratio, 5-Year Low/High Range
Represents the lowest and highest Price/Earnings Ratio range a stock experiences over a period of up to 5 years. A P/E ratio is derived by dividing a closing price by the summation of the latest four quarters of earnings. To obtain the five year range, up to 20 quarters are used for this calculation. All figures are adjusted for stock splits.
Companies that report Funds From Operations will note this data item as "5 YR P/F" in place of "5 YR P/E".
Price/Earnings (P/E) Ratio, Current and Relative to S&P500
Current price-to-earnings ratio and its relation to the P/E ratio of the stocks making up the S&P500 index. The P/E ratio is computed daily using the most recent closing price and the latest trailing 12 months of earnings. Stocks with a P/E ratio of 300 or greater are considered statistical outliers and are excluded from this calculation. A measure of "1.5xSP" means the stock's P/E ratio is 50% above the P/E ratio of the S&P 500 index.
For companies reporting Funds From Operations, this figure is presented as "P/F". Relative value with the P/E of S&P500 index is not presented as fund from operations results is not directly comparable to earnings per share data.
Price/Earnings (P/E) Ratio, Quarterly High/Low Range
Calculated by dividing the company's highest and lowest prices for the quarter by the latest trailing 12-months of earnings. Companies that report Funds From Operations will present this data as "P/F" instead of "P/E".
Relative Price Strength (RS) Rating or Relative Strength
One of our exclusive proprietary ratings that measures each stock's price performance over a twelve-month period, compared to all other stocks in our database. To emphasize recent price performance, a 40% weighting is assigned to the most recent quarter (three months) results, with the remaining three quarters each receiving a 20% weighting in the calculation.
Relative Strength Ratings value ranges from 1 to 99 (highest). A relative strength rating of 89 indicates the stock has outperformed 89% of all other stocks in the database.
Initial Public Offering (IPO) stocks are temporarily assigned a "1" rating value until the data from five trading sessions are available for its initial calculation.
Relative Strength (RS) Line
The relative strength line compares a stock's price performance versus the S&P 500. Many charting services plot a RS Line along with the stock's price, moving averages, etc. The line is derived by dividing the stock price by the S&P 500 Index value. An upward sloping line means that the stock's price is outperforming the S&P 500 Index.
Return on Equity (ROE)
Presented as a percentage figure, it is derived by dividing annual income (before extraordinary items, discontinued operations, cumulative accounting adjustments and non-recurring items) by an average of the latest fiscal year and the prior year's stockholders' equity. Brackets [ ] will surround the ROE percentage if the net income being used to derive the data is not from the most recently completed fiscal year; it will subsequently indicate which year the percentage figure corresponds to.
As an indicator of a company's financial performance, ROE measures how efficient a company is with its money. The biggest stock market winners historically showed an ROE of 17% to 50% before they made their huge gains.
Sales + Profit Margins + ROE (SMR) Rating®
One of our exclusive proprietary ratings; this proprietary rating was developed to help investors identify companies with superior (S)ales Growth, Profit (M)argins, and (R)eturn on Equity ratios. This data item combines into one simple "A" to "E" rating system, four fundamental factors used by analysts:
- Sales growth rate over the last three quarters
- Pre-tax profit margins
- After-tax profit margins
- Return on equity (ROE)
Sales growth and after-tax margins are computed with quarterly figures, while return on equity and pre-tax margins are calculated using annual figures. All four factors take in to account the acceleration of the variables (rate of increase).
The rating system is weighted in the following manner:
- A = Top 20% (Outperforming over 80% of other stocks)
- B = Next 20% (Outperforming 60%-80% of other stocks)
- C = Next 20% (Outperforming 40%-60% of other stocks)
- D = Next 20% (Outperforming 20%-40% of other stocks)
- E = Bottom 20% (Outperformed by over 80% of other stocks)
Short Interest
The total number of shares of any stock that have been sold short and not yet repurchased to close out short positions.
Short Interest Ratio
Indicates the number of days it would take short-sellers to cover their positions. Short interest ratio includes two components; trading days required to cover short interest, and total volume percentage change. Both numbers are based on volume reports released by the major exchanges bi-monthly.
The number of days required to cover short interest is based on the latest short interest report volume number divided by the current 50-day average volume. This data item is updated every evening to reflect the change in the 50-day average volume.
The volume percentage change data item is based on change of the most recent short interest volume number versus the previous month's short interest figure. This data item corresponds to the Percentage Change data item listed in each of our three Short Interest Reports.
SmartSelect Corporate Ratings
Six proprietary and exclusive research ratings based on over 50 years of historical research of the characteristics of the top performing stocks before their big moves. These ratings are designed to screen out deficient stocks, identify potential market leaders, save time, and significantly improve stock selection. They include:
- Earnings Per Share (EPS) Rating®
- Relative Price Strength (RS) Rating®
- Industry Group Relative Strength Rating®
- Sales+Profit Margins+ROE (SMR) Rating®
- Accumulation/Distribution Rating (Acc/Dis Ratintg®)
- Composite Rating®
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- Sponsorship Rating
A unique proprietary rating found in the Weekly Chart that helps investors determine if a company's stock is owned by the better-performing mutual funds. Its calculation averages 3-year performance of all mutual funds owning the stock. The rating scale ranges from "A" to "E" (A=Best, E=Worst). An "N/A" appears if not enough data is available to calculate a rating.
Up/Down Volume Ratio
A 50-day ratio that is derived by dividing total volume on up days by the total volume on down days. A ratio greater than 1.0 implies positive demand for a stock.
Yield
This figure represents the relationship of an annualized dividend to a stock's price. To create this figure, we "annualized" (multiply by pay frequency) the most recently paid dividend and divide it by the prior day's closing price.
