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A typical CANSLIM rankings table for the JSE, which you can view from the CANSLIM Blog is shown below. It is published on the first Monday of each month together with all our other strategy screens.

 

The Price is the price of the share on the day the scan was run (19/02/2010 in above example)

Growth EPS Last 2Fin is the % growth in Earnings per share (EPS) over the last two FINALS

Growth EPS last 2Int is the % growth in EPS over the last two INTERIMS reported

ACC EPS FIN and ACC EPS INT are flags that indicate if the share had accelerating EPS growth over the last three FINALS and last three INTERIMS respectively. So assume FIN0 is current final, FIN1 is previous final and FIN2 is the final before that. Then a "1" flag in the "ACC EPS FIN" column means that EPS growth between FIN0 and FIN1 is greater than EPS growth between FIN1 and FIN2. Similarly for interims.

If the flag is red, it means the EPS growth between FIN1 and FIN2 was negative or that FIN2 had negative EPS. So whilst the share still showed accelerating EPS growth in these circumstances, the first growths were off negative bases. A lack of red flags shows the share never had negative EPS or negative EPS growth in the last 30 months. Obviously two black flags are better than one black plus one red flag which is in turn better than two red flags which is in turn better than only 1 black flag.

It stands to reason that we should rate shares highly if they have both flags on, as they have shown consistant accelerating EPS growth for the last 5 reporting periods or 30 months, but the table still shows those shares that meet EITHER condition. Our model portfolios only consider shares with both flags on (be they black or red).

1 YR GROW RANK is the rank percentile that the share is with respect to relative strength to all other shares on the JSE (LEADERSHIP.) For example the first share has a 52-week share price growth rate that exceeds 73.7% of all other shares on the JSE. O'Neil likes this to be 80% and above. The last share has a share price growth that only exceeds 34.1% of the rest of the JSE. Higher is better. The fastest growing share on the JSE in the last 52-weeks will show a 100%.

% 52WK HIGH shows what percentage of its rolling 52-week high the share is trading at (NEW HIGH.)O'Neil likes shares to be trading at new highs so look for this to be 80% or more.

SIZE AND LIQUIDITY Use these fields to assess demand for the share and liquidity as well as supply. O'Neil likes to see shares that are infrequently traded (hinting at lack of supply) and also steers clear of very large cap stocks (as they will be widely held by institutions and there will be plenty of supply). However he likes to see illiquid shares held by 1-2 institutions to restrict supply even further.

Note that this does not mean large cap shares are not an option, and in fact using this strategy with large cap shares will probably produce very acceptable results in the medium to long term. But if you are looking for "ten baggers" (shares that grow more than 1,00% over 3-5 years) then smaller cap and illiquid shares are what you are looking for.

LAST ROC This gives the shares most recent return on capital employed ratio. O'Neil preferred this to be 17% and above, but we think anything above 15% is excellent. Avoid shares with a ROC ratio below the current inflation rate.

FUNDAMENTALS This gives you some other interesting fields. Generally speaking we favour low PE stocks, with low debt:equity and high ROC. A dividend yield will be a plus but O'Neil was not particularly interested in this as this is a growth stock strategy and growth stocks typically don't pay dividends. Because of the stringent EPS growth requirements of this screen it would be expected that the CANSLIM shares have higher ROC's than average as the table above demonstrates.

CUP AND HANDLE : One final thing you should check for is that the share's chart is displaying a "Cup with handle" pattern. O'Neil was quite insistant on this criterion. If the shares "Ticker" is displayed in the table in  BLUE (see NCS in table) then we have identified a moderate cup-with-handle pattern at the time. If the ticker is BOLD GREEN (see TPC in table) it means we saw a strong cup-with-handle pattern. If the ticker is black it means we could not see any such pattern.

The entire pattern can be as short as 7 weeks and as long as 65 weeks. Generally, cups with longer and more "U" shaped bottoms, the stronger the signal. Avoid cups with  sharp "V" bottoms and ideally the cup should not be too deep. Also, avoid handles which are too deep since the handles should form in the top half of the cup pattern. 

Volume should dry up on the decline and remain lower than average in the base of the bowl. You ideal buying point is as the share breaks out of the handle but remember this strategy predicts huge growth so even a share with the chart as shown above (breakout already occured) is still acceptable for an entry.

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