Partner With Us NRI

Open Free Demat Account Online with ICICIDIRECT

What is CANSLIM method in market?

Picking a stock to invest in is not easy for any investor. Whether you are a seasoned trader in the market or a novice who just opened a demat account, it will take a lot of research and analysis before picking out the best stocks to invest in. That will take time and effort. To make life easier for the investor community, William O’Neil of Investors’ Daily, came up with an award-winning system for picking stocks.

O’Neil created a product that was never seen before. He brought together a few fundamental factors of stock into one method. He later found seven common characteristics to select the stocks, which can grow faster than the market. Each criterion is represented by one of the letters in the strategy’s name.

C- Current quarterly earnings

A-Annual earnings

N- New products or management or price high

S -Supply and demand

L- Leader or Laggard

I – Institutional sponsorship

M- Market direction or trend

Read more: 5 intelligent tips for beginners in the Stock Market

Let us look at these seven traits of the can slim method to picking the best stocks.

C- Current quarterly earnings:

This quarter, a company’s EPS needs to have at least 20% increase from the same quarter last year. Anything lesser and the company need not be considered as an investment option. You can calculate the EPS of a company by dividing the net profit by the number of outstanding shares.

A -Annual earnings

The company you consider as an investment should increase annual earnings over the last three to five years. The company’s EPS should increase at least 20-25% every year over three years to be considered an investment.

EPS is the earning per share and can be calculated by dividing the net profit by the total outstanding shares.

N-  New 

You need to check how innovative a company is.  This innovation is not just the release of new products. It can also be a unique style of management. For example, a company’s share prices might increase if it acquires a profitable company at a reasonable valuation. Companies like these are considered a good investment.

S -Supply and demand

You should buy shares of a company where the demand exceeds the supply. According to this method, a small company with low share supply has a higher chance of growth compared to a large company whose equity is high. Apart from the supply of shares, you can also check the recent surge in company’s trading volume.

L- Leader or Laggard

You need to compare the stock’s performance to its peers and competitors in the industry and check if it is leading the pack or lagging. Stocks that are leaders based on relative price strength rating are considered the best investment option. Stocks with a relative price strength of 80 and above are considered best. Relative price strength of 80 means that the stock has outperformed 80% of all other stocks in price performance.

I-Institutional sponsorship

It takes a lot of money for a company to grow. A company’s growth is usually financed by its investors. You should always invest in companies with some solid institutional investors' backing. These stocks are considered a good investment.

M- Market Direction: 

Knowing the market direction is as important as following the other criteria. Even if you fulfil all the other criteria, you need to know whether the market is bullish or bearish. You can find which way the market moves by following the market indices. This method works best in the bullish market and typically avoids any stock selection in the bearish market.


Thus the CANSLIM method can help you pick out the best stock. It is not enough that you know which stocks to invest in. You should also always follow the basic rules of investing. Once you choose the right stocks and follow the correct practice of investing, you are sure to make profits out of your investments.

Disclaimer – ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investment in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.

Most Popular

  • 13 May 2022
  • ICICI Securities

The Five-Point Financial Planning Checklist For Your Family

Whether you just got married or planning to have a baby or have dependents, you should have financial plans for every stage in your life to ensure a secured future for your family members. Here are five things you can do financially for your family.   

  • 12 May 2022
  • ICICI Securities

What is a Zero Coupon Bond?

You get fixed returns in the form of interest until maturity when you invest in a bond. Zero-coupon bonds work a little differently. In this article, find out what zero-coupon bonds are, their advantages and whether you should invest in them. 

  • 12 May 2022
  • ICICI Securities

What are Cross Currency Pairs?

The forex market is the largest financial market globally. Currency trading is a lucrative and booming business. While most currencies trading happens in relation to the US Dollar, some don’t. That forms the basis of cross currency pairs. Here’s what you need to know about it. 

  • 12 May 2022
  • ICICI Securities

Investing principles from Benjamin Graham: The Father of Value Investing

Benjamin Graham was a British born economist, professor, and investor who taught at Columbia University. He was also a mentor to some of the most famous investors of the 20th century, including Irving Khan, John Templeton, & Warren Buffett. Buffett called him "the second most influential figure in his life, only after my father". 

  • 12 May 2022
  • ICICI Securities

How to Invest in Nifty 50?

The Nifty 50 is the benchmark index of the National Stock Exchange. It represents the 50 largest companies listed in India. Investing in the Nifty 50 can be a good idea for those looking to make index-linked returns. Here’s how you can invest in the index. 

  • 12 May 2022
  • ICICI Securities

Investment philosophy of Cathie Wood: The most powerful woman on Wall Street

Catherine Duddy Wood, also called Cathie Wood, is an investor who primarily invests in disruptive technologies and is the founder, chief executive officer, and chief investment officer of ARK Investment Management, LLC, an investment management firm mostly active in the United States.

  • 11 May 2022
  • ICICI Securities

How to Use Technology to Improve Your Finances

Technology has made life simpler for everyone. In the realm of personal finance, technology has streamlined many processes—from budgeting to automating your payments. On National Technology Day, let’s look at how technology has transformed our finances. 

  • 11 May 2022
  • ICICI Securities

How to Invest in your Every Goal with Mutual Funds?

Each of us is unique. We have different needs and goals in life. Some of us can ride along swinging markets, while some may need a relatively conservative investment tool. 

  • 11 May 2022
  • ICICI Securities

Four Reasons Why Entrepreneurs should Invest in Equity Mutual Funds

Equity mutual funds provide growth opportunities not just for individual investors but also for entrepreneurs and corporates. They make excellent investments for anyone looking for wealth creation. This article will give you four reasons why businesspeople should consider investing in equity mutual funds.