Thursday, 19 January 2012

CAN SLIM Method: Stock Picking & 4 Solid Long-Term Companies

The CAN SLIM Method

Here are the basics of William O'Neil's CAN SLIM method . If you really want to cut to the chase, skip this and go straight to the CAN SLIM picks below:

C: Current earnings - Was the most recent quarter one where profits grew, ideally by 20% or more?

A: Annual earnings - Are earnings for the last twelve months at least 25% better than the prior twelve?

N: New - Is there new management, a new product or a new technology supporting growth?

S: Supply and demand - Are there persistently more buyers than sellers of the stock?

L: Leadership - Is this stock outperforming its peers, and at least in the top 20%?

I: Institutional sponsors - Have institutions like fund companies and pensions put a stamp of approval on the stock by owning it? A good stock needs at least three major institutional owners.
M: Market - Since most stocks move in tandem with the market, is the broad market at least modestly on the rise?

Current CAN SLIM Picks

Like I said, if you're a stickler on CAN SLIM's requirements, you're not going to find any stocks worth owning right now. If you're OK with just using the spirit of the criteria though (primarily the leadership and income growth requirements), and adjust for the current environment, you can indeed find some nice picks.

A.H. Belo Corp. (NYSE:AHC): This newspaper/television company hasn't been profitable on a trailing 12-month basis, a swing to a profit is anticipated for 2011.

Miller Industries (NYSE:MLR): Last quarter's revenue growth topped triple-digits despite a luke-warm rebound in auto sales (Miller makes car-haulers), and after four solid earnings beats, there's no reason not to expect more mega-growth.

Standex International Corp. (NYSE:SXI): This industrial machinery maker rebounded nicely following the recession. Oh, things weren't easy for Standex - the company lost 18 cents per share in fiscal 2009. That was book-ended, however, by income of $1.55 per share in 2008 and a profit of $2.25 per share in fiscal 2010. 2011 is looking even better.

Thermadyne Holdings (Nasdaq:THMD): Slice it however you want to - this welding-product maker more than quadrupled per-share earnings (year over year) in Q2, or is on pace for record-breaking earnings year in 2010.

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