1. C = Current Quarterly Earnings Per Share: How Much Is Enough?

2. A = Annual Earnings Increases: Look for Meaningful Growth

3. N = New Products, New Management, New Highs: Buying at the Right Time
4. S = Supply and Demand: Small Capitalization Plus Big Volume Demand
5. L = Leader or Laggard: Which Is Your Stock?
6. I = Institutional Sponsorship: A Little Goes a Long Way
7. M = Market Direction: How to Determine It

CANSLIM
C
1. Determine how EPS earnings impact of Share prices in KSE
2. Behavior before and after the Quarter report
3. % increase in the quarter earning and %age increase in the stock price.
4. Compare Eps Earnings of the companies in the same industry.
5. How different level of eps in the same industry is in relation with the Stock price
6. Eps surge can be caused by sale of assets, Caution
7. Companies with a good track record can have slow eps quarters
8. If there is delay in the quarter report look into it
9. 10-20% eps growth is preferable but check the industry for relevant answer

A
1. Check the previous growth trends on a graph and understand the cycle
2. Companies should be preferred for continuous year on year growth for at least 5 years
3. 1 down year can slow the growth overall
4. Use the 5-year growth criteria to flush out companies
5. See year on year growth and then break it down into quarters

N
1. Identify the high peak with new product introduction and also the low peak with the failed
product
2. %age increase or decrease bcz of the new product/failed product
3. Scan for new products
4. Check for price consolidation/ Correction?
5. Never buy if the price surges above 5-10% after new product and buy if price falls below 5-10%
after a failed product
 S
1. If you are choosing between two stocks to buy, one with 10 million shares outstanding
and the other with 60 million, the smaller one will usually be the rip-roaring performer if
other factors are equal.
2. Stocks that have a large percentage of ownership by top management are generally your
best prospects.
3. companies with large capitalizations (number of shares outstanding) as a rule produce
dreadful price appreciation results in the stock market. The companies themselves are
simply too big and sluggish.
4. If a mammoth-sized company occasionally creates an important new product, it still may
not materially help the company's stock because the new product will probably only
account for a small percentage of the gigantic company's sales and earnings
5. Prefer entrepreneural companies, look at the management holding in the company
6. If I were a large institutional investor, I would rather own 200 of the most outstanding,
small- to medium-sized growth companies than 50 to 100 old, overgrown, large-
capitalization stocks that appear on everyone's "favorite fifty" list.
7. Overabundant stock splits create a substantially larger supply and may put a company in
the more lethargic performance, or "big cap," status sooner.
8. One fairly positive sign, particularly in small- to medium-sized companies, is for the
concern to be acquiring its own stock in the open marketplace over a consistent period
of time. This reduces the number of shares of common stock in the capital structure and
implies the corporation expects improved sales and earnings in the future. Total company
earnings will, as a result, usually be divided among a smaller number of shares, which
will automatically increase the earnings per share
9. A corporation that has been reducing its debt as a percent of equity over the last two
or three years is well worth considering

L
1. If the stock's relative price strength, on a scale from 1 to 99, is below 70, it's lagging
the better-performing stocks in the overall market. That doesn't mean it can't go up
in price, it just means if it goes up, it will probably rise a more inconsequential
amount
2. Buy among the Best Two or Three Stocks in a Group
3. Avoid Sympathy Stock Moves
4. consider restricting your buys to companies showing a relative strength rank of 80 or
higher or find out what the kse investor view is
5. if the overall market suffers a 10% intermediate term falloff, three successful growth
securities could drop 15%, 20%, and 30%. The ones down only 15% or 20% are likely
to be your best investments after they recover. Of course, a stock sliding 35% to
40% in a general market decline of 10% could be flashing you a warning signal, and
you should, in many cases, steer clear of such an uncertain actor.
6. Once a general market decline is definitely over, the first stocks that bounce back to
new price highs are almost always your authentic leaders
7. Find out which stocks shed the least value per share during the economic crises and how
faster they bounced back, name the companies too
8. Sponsorship may take the form of mutual funds; corporate pension funds; insurance
companies; large investment counselors; hedge funds; bank trust departments; or
state, charitable, and educational institutions
9. excessive sponsorship can be adverse since it merely represents large potential selling
if anything goes wrong in the company or the general market
10. It is, therefore, not always as crucial to know how many institutions own a stock as
it is to know which of the better ones own or have purchased a particular stock in
the last quarter. The only important thing about the number of institutional owners is
to note the recent quarterly trend. Is the number of sponsors increasing or
decreasing
11. buy stocks that have at least a few institutional sponsors with better-than-average
recent performance records

M
1. The best way to determine the direction of the market is to follow and
understand every day what the general market averages are doing.
2. Learn to interpret a daily price and volume chart of the general market averages.
If you do, you can't get too far off the track. You really won't need much else
unless you want to argue with the trend of the market.
3. On one of the days in the uptrend, the total volume for the market will increase
over the preceding day's high volume, but the Dow's closing average will show
stalling action, or substantially less upward movement, than on the prior few
days.
4. There could be a rally so the prices of the stock bounce back. There are two ways that it
can go fail succeed
5. There is a relation between the interest rate on the market, find out what is the relation
with KSE
6. During a bear market, stocks frequently open strong early in the morning and
close weak by the end of the day. During bull markets, stocks tend to open down
and come back later in the day to close up strongly.
7. Watch for the first time an attempted short-term rally follows through on
anywhere from its third to tenth day of recovery. The first and second days of an
attempted improvement can't tell you if die market has really turned, so I ignore
them and concentrate on die follow-through days of the rally. The type of action
to be looked for after the first few days of revival is an increase hi total market
volume from die day before, with substantial net price progress for die day up 1%
or more on the Dow Jones or S&P Index.
8. At stock market lows, the individual investor is safer to wait for a second
confirmation of the turn before buying heavily
9. with the Dow Jones up 18 or 20 points or more (if the Dow is in the 1800 area)
and accompanied by an increase in daily volume from the day before, will usually
be on the fourth, fifth, sixth, or seventh day of the attempted rally. This is your
second confirmation and main buy signal. detail in the next two chapters. Follow-
throughs after the tenth day indicate weakness.
10. Another sure sign of the beginning of a bear market, as mentioned earlier, is
when the original bull market leaders falter and a number of lower-quality, low-
priced speculative stocks begin to move up. When the forgotten old dogs begin to
bark and raise up out of the grave and spearhead the market's advance, the
stock market is on its last feeble leg.
11. Bull markets do not end easily; neither do bear markets. You generally get at
least two or three pullbacks to fake out or shake out the few remaining
tenacious, but emotional, speculators. After everyone that left to take action in
the same direction, so the market will finally turn and begin a whole new trend.
12. The market has a simple way of whittling all excessive pride and overblown egos
down to size. After all, the whole idea is to be completely objective and
recognize what the marketplace is telling you, rather than try to prove that the
thing you said or did yesterday or six weeks ago was right. The fastest way to
take a bath in the stock market or go broke is to try to prove that you are right
and the market is wrong.
13. Almost always, the really big money is made in the first one or two years of a
normal new bull market's upward movement
14. It is valuable to know, for example, how the market reacted in the past to a
change of administration in Washington, rumors of war, wage and price controls,
discount rate changes by the Federal Reserve Board, or "panic" news
circumstances
15. Short interest ratio
16. A decline in the average price of the most active stocks daily is an indicator of
downgrading in quality and an increase in speculative buying
17. A defensive stock index is composed of defensive (more stable and supposedly
safer) stocks, such as utilities, tobaccos, foods, and soaps. Increased strength in
such stocks after a couple of years of bull market conditions may indicate "smart
money" slipping into defensive positions and a weaker general market ahead

That is not what we're doing. We're buying companies with strong fundamentals,
large sales and earnings increases resulting from unique new products or services
and trying to time the purchases at a correct point as the company emerges from
consolidation periods and before the stock runs up dramatically in price. To
summarize this vitally important and rather complex subject, learn to interpret the
daily general market indexes and action of the individual market leaders. Once
you know how to do this correctly, you can stop listening to all the uninformed,
costly, personal market opinions from amateurs and professionals alike. How to
Remember and Use What You've Read So Far It isn't enough just to read; you
need to remember by association and to let the term of office for the head of
the Fed coincide with the presiapply a simple-two word phrase—C-A-N S-L-I-M.