Page 707 - How to Make Money in Stocks Trilogy

12 HOW TO MAKE MONEY IN STOCKS SUCCESS STORIES

ing computers to his research paid off big. He found seven traits that win-
ning stocks had in common prior to making their big price moves. This
became the basis for the CAN SLIM Investing System, which has helped
both professional and individual investors for decades.
Each of the letters in CAN SLIM stands for a different trait that winning
stocks have in common.
C Current quarterly earnings. Minimum of 25% increase in the most
recent quarter. Many of the market’s biggest leaders will have earnings
increases in the triple digits.
A Annual earnings. Rate of increase at least 25%, the higher the better.
N New (new products or services, new management, new highs).
Innovative companies making new price highs indicating institutional
buying.
S Supply and demand. A product or service that is in big demand by the
public.
L Leadership. Stocks at the top in their industry group with earnings,
sales, return on equity, and price action.
I Institutional support. Mutual funds, hedge funds, pension funds,
banks. The professional money is what will drive a stock’s price higher.
M Market direction. Buying leading stocks with top fundamentals in an
uptrending market and selling stocks when the market goes into a
correction.

• KEY POINTS •

• The biggest winners will have the seven CAN SLIM traits.
• Buy stocks in an uptrending market.

When Is the Right Time to Buy Stocks?
Stocks form chart bases or areas of price consolidation. When they come out
of these consolidations on trading volume that is 40% higher than average,
we refer to it as a breakout, and this is when a stock should be bought.
Buying a stock as it is breaking out of a base pattern puts the odds in your