How to Make Money in Stocks — Chapter 1: The CAN SLIM 7-Factor Model for Growth Stocks

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William O'Neil's How to Make Money in Stocks Chapter 1: Master the CAN SLIM 7-factor model for identifying market-leading growth stocks.

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How to Make Money in Stocks — Chapter 1: The CAN SLIM 7-Factor Model for Growth Stocks

"The whole secret to winning in the stock market is not to be right all the time, but to lose the least amount possible when you're wrong." — William O'Neil

Financial Context

William O'Neil analyzed top market winners over a century to formulate the CAN SLIM system, blending fundamental EPS acceleration with price momentum.

Wall Street Application

The CAN SLIM Framework

  • C: Current quarterly EPS up 25%+ YoY.
  • A: Annual earnings growth of 25%+ over 3–5 years; ROE > 17%.
  • N: New product, management, or new all-time price highs.
  • S: Supply & Demand (volume surge on breakout).
  • L: Leader — Relative Strength (RS) Rating > 80.
  • I: Institutional Sponsorship increasing.
  • M: Market Direction (confirmed uptrend via Follow-Through Day).

Trading Execution Rules

  1. Run Strict Screens: Filter for EPS growth >25% and RS Rating >80.
  2. Buy New Highs: Overcome fear of buying all-time high breakouts.
  3. Track Institutional Funds: Verify rising institutional ownership.