For growth-oriented stock selection, William J. O’Neil’s CANSLIM system provides a structured methodology blending fundamental indicators with price momentum:
Focus on firms showing at least 25% EPS growth in the most recent quarter compared to the prior year, backed by robust quarterly sales growth (20%+).
Look for consistent annual EPS growth over the past 3 to 5 years, targeting an annual compound growth rate of 25%+.
The catalyst factor: a new product line, a strategic management pivot, or a stock breaking out to new all-time highs.
A preference for firms with efficient share floats or active share buyback programs, coupled with high volume on up-days.
Buy only the market leaders within the top-performing industries; avoid lagging competitors.
Seek stocks with backing from high-quality institutional managers (mutual funds or pension funds), indicating institutional liquidity support.
Trade only in the direction of the broad market trend; avoid buying growth equities during a confirmed market downtrend.