The N In CAN SLIM: Watch For A New Product, A New Trend
Chipotle Mexican Grill (CMG) wowed us with its fast-casual burrito restaurants. Intuitive Surgical (ISRG) soared with its robotic gear. And Apple (AAPL) hit pay dirt with the iPhone.
Past big winners in the stock market often owe their advances to such big new products. Their runs also get sparked by new industry conditions, new management or some other new thing.
"It takes something new to produce a startling advance in the price of a stock," says IBD founder and Chairman William O'Neil in his best-seller, ".
To emphasize that investors should focus on what's new, there is an N in . It stands for "new," as you probably have guessed. CAN SLIM is IBD's investing strategy, and currently the Investor's Corner column is going over a different aspect of the strategy each day.
So how do you find publicly traded companies that are doing something new? Well, some sections of IBD are especially focused on covering such firms.
For starters, check out The New America section each day. Today the section, which also carries the New Issue America feature, is found on Page A5.
Over the years, it has featured names like Chipotle and Intuitive, along with online restaurant reservations pioneer OpenTable (OPEN), specialty retailer Lumber Liquidators (LL) and many other winners. "It's a good way to add to your watch list," says O'Neil in his book, referring to the New America section.
Among the stocks featured so far this month are homebuilder Pulte Group (PHM), packaged-foods producer B&G Foods (BGS) and Pier 1 Imports (PIR). These firms are creating or enjoying new customer demand for their goods.
Another useful section for the N factor is the Industry Snapshot, which appears in the Monday edition. It's a good source for learning about new industry conditions. A different IBD is featured each week.
So far this month, the featured industries have included automakers, which analysts say have entered a multiyear uptrend, and casino operators, which are benefiting from solid growth in the Chinese gambling haven of Macau.
In addition, investors should keep in mind that the N in CAN SLIM refers to focusing not just on what's fundamentally new, but also technically new.
In other words, watch for a stock chart that's showing shares touching .
So the and its accompanying column, the New Highs List Analysis, are always worth checking out.
IBD's research has found that it pays to pay attention to stocks making this list — particularly ones making it for the first time, drawing big turnover and benefiting from a broad uptrend. Such stocks tend to produce multiple entry points for investors.
