Background
William O'Neil (1933-2023) founded Investor's Business Daily and created the CAN SLIM methodology — a 7-factor system for selecting growth stocks that has produced more verified millionaire traders than any other approach. His book 'How to Make Money in Stocks' has sold over 2 million copies. O'Neil studied every stock market winner from 1880 to the present, identifying the common characteristics of the best-performing stocks before their major advances.
Core Methodology
CAN SLIM is a mnemonic for 7 fundamental and technical factors that the best stocks share before their biggest moves: Current earnings, Annual earnings, New product/management/high, Supply and demand, Leader or laggard, Institutional sponsorship, Market direction. The system combines growth stock selection with chart pattern timing (cup-with-handle, double bottom) and strict loss-cutting discipline.
Key Trading Rules
- C: Current quarterly earnings growth of 25%+ (ideally accelerating quarter over quarter)
- A: Annual earnings growth of 25%+ over the past 3-5 years
- N: New product, new management, or new price high — the catalyst for the move
- S: Shares outstanding (lower float preferred) and volume on breakout (50%+ above average)
- L: Leader, not laggard — relative strength rating of 80+ (top 20% of all stocks)
- I: Institutional sponsorship — increasing number of quality mutual funds buying
- M: Market direction — only buy in confirmed uptrends; raise cash during corrections
Key Concepts
Books & Resources
How to Make Money in Stocks by William O'Neil. MarketSmith (charting platform with CAN SLIM screening). Investor's Business Daily (IBD). O'Neil's 'Model Book' of historical stock chart patterns.