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The CANSLIM® methodology is designed to identify high-potential stocks by combining both fundamental and technical analysis. By focusing on key factors that drive stock growth, CANSLIM® helps investors build market-winning strategies by targeting stocks with strong earnings, consistent sales growth, and right market timing.
The CANSLIM® strategy targets companies that exhibit robust earnings and revenue growth. It focuses on stocks with consistent annual earnings growth of 15% or more, with the potential to surge to 40%-50% or higher—often triggered by "earnings surprises”. Additionally, the methodology favors stocks showing quarterly sales growth of at least 25% or accelerating trends over three quarters, alongside a strong ROE above 17%, with exceptions for challenging sectors.
A standout feature of CANSLIM® is the"N" factor—a catalyst sparking stock price leaps. This could be: A game-changing product or service, transformative management shifts, or industry-wide trends like supply shortages or technological breakthroughs.
Institutional backing plays a crucial role in stock selection. The CANSLIM® methodology prioritizes stocks with strong support from mutual funds, hedge funds, or pension funds as a key criterion. Additionally, the “L” factor in CANSLIM® evaluates leadership qualities within a stock, whether through price performance, innovative products, or a dominant sector position. Technical parameters, such as supply and demand, are equally important. A strong supply and demand rating indicates healthy buying interest in the stock. To provide a comprehensive analysis, we leverage AI-powered proprietary ratings that encompass all these parameters. These ratings are conveniently accessible on the MarketSmith India app and website, empowering you to make informed investment decisions.
Understanding the market's direction is crucial for identifying the right stocks at the right time. CANSLIM® classifies these market phases into:
2.Uptrend Under Pressure
3. Downtrend– Stay out of the market.
4. Rally Attempt
These market directions can be tracked in the outlook section of MarketSmith India’s app and website.
Using rotation graphs, CANSLIM® targets leading stocks in top-performing sectors. The Group Rank list on the product helps to list of top performing groups in the market. Overall we have divided the stocks in 197 groups. Later, assess technical patterns like Cup-with-Handle, Double Bottom, or Flat Base. Breakouts on high volume within the "ideal buy zone" (0-5% above the pivot) are considered prime buys. We also use algo-based pattern recognition on stocks to identify the patterns, which is available on MarketSmith India’s evaluation page.
To maximize returns and manage risk post-investment, CANSLIM® applies strict profit-loss rules:
● Cutting losses at 7%-8% below the purchase price to protect capital.
● Booking profits at a 25% gain, unless a multibagger potential exists.
● Exiting or reducing positions if a stock breaks key support levels or moving averages on higher volumes.
This disciplined, data-driven approach aims to deliver consistent, high-impact results.
To assist investors in implementing the CANSLIM® methodology, MarketSmith India provides a range of powerful tools to simplify the process of identifying winning stocks. These tools combine advanced algorithms and exclusive data, making stock selection and decision-making easier.
MarketSmith India’s stock selection tool curates a list of stocks near their ideal buy zones, based on chart patterns like cup-with-handle, double-bottom, and flat bases. The platform’s advanced algorithms ensure precision, making your trading and investing decisions effortless. Click here to check the list.
Leveraging decades of success globally, MarketSmith India provides access to William O’Neil’s proprietary ratings, such as EPS Rank, Buyer Demand, Group Rank, and Relative Strength Rating. These ratings will enable you to easily assess a stock’s earnings strength and growth potential. As a shortcut for identifying top stocks with earnings growth, MarketSmith India developed the Earnings Per Share (EPS) Rating. Indian stocks are ranked on a 1 to 99 scale with 99 being the best. The MarketSmith India’s Relative Strength (RS) rating shows you which stocks are the best price performers by measuring the stock's performance over the previous 12 months. That performance is then compared with the performance of all other publicly traded companies in India on a 1 to 99 scale, with 99 being the best
MarketSmith India offers learning articles, videos, and screeners to empower you with the knowledge to pick the right stocks. You can also create personalized lists to suit your investment goals. Click here to build your own screen.
The Model Portfolio is curated by seasoned analysts, offering high-quality growth stock recommendations that consistently outperform key indices. Click here to check its outperformance. The selection process follows the CANSLIM® methodology. Initially, we curated a watchlist based on fundamental analysis. Our team of analysts conducts in-depth evaluations of these stocks, identifies growth drivers, participates in earnings calls, and refines the list to create a final watchlist. The decision to buy is then guided by the technical breakout of top-quality stocks from this final watchlist.
Using the CANSLIM® methodology, we successfully identified Dixon Technologies and added it to our portfolio. The stock showcased exceptional EPS and RS Rank, with accelerating revenue and earnings. It also broke out from a base on higher volume, signaling a strong entry point. By adhering to our sell rules, we booked over 20% gains when the stock breached its 50-DMA on higher volume. Shortly after, the stock experienced a sharp decline, but our disciplined approach allowed us to protect our profits.
Similarly, leveraging our curated list and rules, we added E-Pack to our portfolio in September and achieved an impressive 32% gain in under a month. In Exide Industries and Sanghvi Movers, we booked around 70% gains in May–June by following our profit-taking and sell strategies. Post-exit, Sanghvi Movers plunged more than 50%, while Exide Industries dropped 40% from its 52-week high.
This demonstrates the effectiveness of combining CANSLIM® insights with a disciplined approach to profit booking and risk management.
MarketSmith India has Live integration with some of India’s brokers and businesses like 5Paisa, Moneycontrol, FYERS, ANAND RATHI, Mint, and GEOJIT.
MarketSmith India’s stock evaluation page provides a comprehensive view of a stock’s fundamentals and technicals, and shows the future growth prospects of the stock, on a single screen. Features like the Guru Screen show how a stock aligns with the strategies of top market experts, simplifying the process of stock selection. Click here to evaluate any stock.
Our platform provides tools to evaluate stocks against the most important stock-picking criteria from renowned investors like Warren Buffett, Benjamin Graham, Peter Lynch, and James P. O’Shaughnessy. The Guru Screens calculate a pass/fail percentage to indicate how well a stock meets their respective strategies. Additionally, we offer the Minervini Trend Template, which identifies stocks with moving averages in an uptrend based on the specific criteria outlined by Mark Minervini, helping you build a list of potential winners.
MarketSmith India is your ultimate tool for smarter, more confident investing. We generate ideas so you can generate alpha. To explore more, visit our website or app, or delve into William O’Neil’s bestselling book, How to Make Money in Stocks: A Winning System in Good Times or Bad, a cornerstone resource in the investment world.
As William O’Neil wisely stated, “Managing a portfolio of stocks is like tending a garden. If you don’t keep at it, those lovely flowers you planted will be overrun by unsightly weeds.” To keep your investment garden thriving, be sure to visit our website and app regularly.
Disclaimer: This article is sponsored content. The inputs and details accounted for in the article do not necessarily reflect the views of Mint, and Mint does not endorse or assume any responsibility for the information provided. Investing in stock markets involve financial risks, take expert advice before investing.
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