CANSLIM Strategy Explained: A Proven Formula to Find Winning Stocks

Introduction:

Why do some investors consistently catch breakout stocks before the crowd?

While luck might play a small role, most successful stock pickers follow a proven, disciplined strategy.

One such strategy that has stood the test of time is CANSLIM — developed by William J. O’Neil, the founder of Investor’s Business Daily. It’s a powerful framework that combines fundamental strength with technical momentum and is designed to help you identify high-potential growth stocks early in their uptrend.

In this blog, we’ll break down the CANSLIM strategy and show you how to implement it using a ready-made screen on sharpely.

What is the CANSLIM Strategy?

CANSLIM is an acronym for seven key characteristics that top-performing stocks often exhibit before they make big moves. It’s not just about financials or price action — it’s a holistic system that blends earnings, market sentiment, and technical cues.

Here’s a quick breakdown of the CANSLIM framework:

Each letter represents a distinct trait that helps filter for fundamentally sound and technically strong stocks.

Breaking Down the Rules Behind CANSLIM

We’ve taken these 7 traits and turned them into a clear set of screening rules that you can run on a stock screener like sharpely.

Here’s how each component translates into a practical condition:

Let’s walk through them:

• C – Current Earnings: Look for stocks with at least 25% YoY EPS growth in the most recent quarter. This shows strong short-term performance.

• A – Annual Earnings Growth: The company should show consistent growth over multiple years — at least one quarter with 25% growth for three years in a row.

• N – New: Whether it's a new product, service, or price high, this factor captures innovation and momentum. We screen for stocks trading within 15% of their 52-week high.

• S – Supply & Demand: Price moves up when demand exceeds supply. So, we look for increasing average volume, a sign that more investors are buying in.

• L – Leader or Laggard: Top stocks tend to outperform the broader market. We filter for stocks outperforming at least 80% of the Nifty 750.

• I – Institutional Sponsorship: Analyst upgrades, fund ownership, or buy ratings within the last 90 days act as strong support signals.

• M – Market Direction: Even great stocks struggle in bad markets. This filter ensures the stock is trading above its 200-day SMA, suggesting an overall bullish market trend.

How to Build This Screen on sharpely

The good news? You don’t need to build all this from scratch.

We’ve already done the hard work and published a ready-to-use CANSLIM screen on sharpely that includes all the rules above.

👉 Check out the published screen here.

With just one click, you can view, run, or customize the screen to fit your investing style.

The above version is a very stringent interpretation of the framework. Here is a slightly different interpretation of the same strategy.

 Why CANSLIM Still Works Today

Despite being created decades ago, CANSLIM continues to be relevant — especially in fast-moving, high-growth markets.

✔️ It’s rule-based, not guesswork

✔️ It’s backed by earnings, volume, and price action

✔️ It helps you stay objective and avoid hype

While it’s not a crystal ball, CANSLIM gives you a clear framework to filter out noise and focus on quality opportunities.

Conclusion:

Whether you're a seasoned investor or just getting started, the CANSLIM strategy can help bring structure and clarity to your stock research.

And with sharpely, you can bring this strategy to life — without writing a single line of code.