Paul Senior - You'll read about HUF in IBD after it's posted 8 sequential quarters of accelerating earnings growth, and its price has been appreciating faster than 99.9% of the equity universe for 2 straight years; it will then be a suitable CANSLIM candidate. Meanwhile, the scooters, millions of them, will have started to become cobweb farms in attics across the nation, and HUF will be on the verge of preannouncing a profit disappointment, which will then reset its ratings to numbers approaching zero - after millions of CANSLIM investors have taken their positions. Fortunately, we will all have 8% downside stops set, so if we can get timely fills when HUF crashes, we will have followed the CANSLIM method and escaped with our collective hides.
This is an exaggeration, of course, but something that is entirely possible in the IBD/CANSLIM universe. I remember seeing HAUP at the top of the lists repeatedly; I bought, got shaken out during a little correction while HAUP was in the 30s, pre-split; it ran up to 74 or something immediately after I sold. Then, they announced a split, then missed their number; they're now trading at 6.
The inviting ratings of IBD are backward-looking, and can be a dangerous trap. There are many potential big winners not on the lists, that aren't highly rated because of their price, or lack of earnings; that doesn't mean they're worthless stocks, or that they won't go up - they just don't fit O'Neil's CANSLIM recipe.
As far as I'm concerned, all stocks are potential investment candidates; given the size of that field, I welcome any set of screens to narrow the field to likely winners. As it happens, IBD is a good set of screens; except for some of the IPOs I've gotten from Wit, my best performing holdings are in the IBD top 200; most are in the top 50.
Having said all that, I've got an eye peeled now on HUF - and SMRA, and AVN; AINN is currently being very nice to me. If I see them start acting nice, I might jump in. With 8% downside stops set, of course . . .
Regards,
Jon |
