Today, I want to talk about a gentleman named William O’Neil. William O’Neil started and runs something called Investors Business Daily. This is really a stock picker’s dream because everything in it has to do with individual stocks. It doesn’t go into a lot of the economy and so on.
William O’Neil wrote a book on how to pick the greatest stock market winners of all time. What he actually did was go back to 1953 and track the best stock market performers all the way through 1988. Even though those are old dates, the same process holds today.
He formed or created this acronym called CANSLIM, C-A-N-S-L-I-M. CANSLIM is a way to identify the best stock market winners of all time.
The C stands for current quarterly earnings. You want them to be at least 25% compared to the same quarter of the previous year.
For example, if you had the first quarter of 2026, you would compare that to the first quarter of 2025. You want the quarterly earnings increase to be at least 25%.
The A stands for annual earnings growth, which should be up 25% or more over the last three years. Annual returns on equity should be 17% or more.
The N stands for something new, such as a new product or a new service.
Again, this is looking back at the anatomy of the greatest stock market winners of all time.
The S stands for supply and demand, or the number of shares outstanding.
If you go back and look at the best stock performers, they did not have more than 30 million shares outstanding.
The L stands for being a leader in your group or a leader in your industry.
For example, if you were a computer company, even though there were probably 20 other companies that made laptops, you wanted to be the leader in that industry.
The I has to do with institutional ownership. This is one that I think is really easy to track.
You want to have some institutional ownership, but you don’t want to have too much because institutions are what push stocks higher.
You want to have at least 10% institutional ownership, and you don’t want to have more than 50% institutional ownership. If you do, then when institutions get out—and these are foundations, insurance companies, and endowments—they’re not too price sensitive as to when they get out.
When one gets out, others get out, and that puts a lot of pressure on the stock. So you don’t want to invest in something that has too much institutional ownership.
The M has to do with the overall market direction.
The market direction has a big say in everything. If the market is going higher and you’re looking at small growth stocks, CANSLIM is the best way to look at and analyze these companies to identify if they’re the best ones to buy at this time.
If you want me to send you a list of the CANSLIM stocks that we’ve identified right now, just email me, and I’ll send it out to you.
Or, if you want me to do a free analysis on your current holdings, please reach out to me.
Chapwood Investments, LLC, is a partner of Ethos Financial Group, LLC, a Securities and Exchange Commission-registered investment advisor. No mention, opinion, or omission of a particular security, index, derivative, or other instrument in this article constitutes an opinion on the suitability of any security. The information and data presented here were obtained from sources deemed reliable, but their accuracy and completeness are not guaranteed. At any given time, principals at Chapwood Investments, LLC may or may not have a financial interest in any or all of the securities or instruments discussed in this article. Guest contributors do not receive compensation and do not provide endorsements or testimonials. Past performance is not indicative of future results.
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