From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #3073 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk Content-Transfer-Encoding: quoted-printable X-No-Archive: yes canslim-digest Thursday, December 5 2002 Volume 02 : Number 3073 In this issue: RE: [CANSLIM] NXTL, SXT RE: [CANSLIM] NXTL, SXT ---------------------------------------------------------------------- Date: Thu, 5 Dec 2002 11:43:46 -0600 From: "kmalm" Subject: RE: [CANSLIM] NXTL, SXT This is a multi-part message in MIME format. - ------=_NextPart_000_1D19_01C29C53.921455A0 Content-Type: text/plain; charset="iso-8859-1" Content-Transfer-Encoding: 8bit Hi Curt, I think you've identified the stickier issues in CANSLIM and interpreting WON's work. As both Tom and Andy have pointed out in their posts, while WON may *seem* to be stating that ROE>=17 is a "minimum requirement' it turns out it is a guidepost to lead you to better quality stocks. As with other indicators, this is based on his historical view of winning stocks, meaning that "on average" winning stocks had an ROE>=17. As with D/E, ROE can be misleading. For example, if a company rejiggers their capital structure and increases their outstanding shares, this will have an immediate impact on the ROE measure. Another way of viewing it would simply be by asking a question. That is, if you were looking at a stock and it had a "perfect" cup with handle (ok, it's theoretical!); high RS Rank; an RS line making new highs; met all other earnings, sales and profit margin guidelines, and broke out on 150% of ADV, would you pass it up because it had an ROE of 16.5%? If so, why? Does the "low" ROE mean that it is not a good company or a good stock? Katherine -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com]On Behalf Of Curt Corley Sent: Wednesday, December 04, 2002 6:45 PM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] NXTL, SXT Hi Katherine, Thanks for your input. I agree with you and appreciate your interpretation of HTTMIS for the most part. Although I did not mention it, I do compare D/E to the other companies within the same industry. I depart from your interpretation, however, regarding the meaning of the values. If I really want to follow WON’s guidelines, I have to consider some of those values as solid criteria to be met – not just “typical” or “average” values for winning stocks over time. Take ROE for instance. According to my interpretation of the blue book, Chapter 20 clearly states what the ROE should be before you buy a stock. If the ROE is below that amount, it doesn’t even show up on my radar. And that’ s a good thing (at least for me), because I don’t have to devote time to find excuses as to why it didn’t meet that criterion. For me: the more strict the interpretation, the better. After devoting time to my family, my job, and other obligations (not to mention the down-time I allow myself – including the time spent on the CANSLIM Digest list), I don’t have very much time to devote to fundamental and technical analysis of stock candidates. So I would prefer to keep my stock candidates down to at least two dozen different stocks a week. Once again, thanks for your input. As always, you’re an excellent contributor to this list and one of the reasons the list will probably still be around 5 years from now. Cheers, Curt -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com] On Behalf Of Katherine Malm Sent: Wednesday, December 04, 2002 9:11 AM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] NXTL, SXT Hi Curt, Thanks for the data on SXT and NXTL. I also agree with you about being a picky investor and choosing only the best. I'd like to take exception, however, to the idea that all the hurdles WON mentions in HTMMIS must be met simultaneously in order for a stock to be considered "a good stock." WON provides guidelines for each of the CANSLIM criteria, but these are "typical" or "average" values for winning stocks over time. In other words, you are looking for the greatest representation of strength from each of these categories, or what I call the "preponderance of evidence" that the company is a leader, has been able to generate growth in earnings and revenues, produces excellent profitability for the capital employed, and has fuel for future growth. Take for example, the tendency of accounting reporting to lag. By the time it is reported, it's past history. The price of the stock, on the other hand, is anticipating future earnings. So, if the technicals show sound accumulation and the preponderance of evidence of fundamentals and due diligence shows a pattern of growth and leadership, it's not necessary that each and every CANSLIM fundamental "typical" recommendation be met. I'm not arguing for NXTL...but I can use it as an example. 12 month EPS is -2.10, however, this includes a value from 4 quarters ago of -2.25, a bathtub quarter that included some unusual one time charges that couldn't be backed out of the pro forma number. More importantly, however, the most recent 2 quarters have been a positive .35 and .55, showing 166% and 304% growth in earnings over the same quarter in the prior year. As a result, the TTM ROE is also going to lag. Now, you have 3 hurdles being missed simultaneously as a result of one bathtub quarter (EPS growth, ROE and raw EPS) because each of these accounting measures is inter-related. It also doesn't recognize the *turnaround* in the pattern of earnings over the last 2 quarters, something WON has talked about in the past as an important indicator after a company has gone through tough times. One last example, i.e., the hurdle for the D/E ratio. While WON suggests that "lower is better" it is also important to compare the D/E to other stocks in the same industry. For example, in highly capital intensive industries it is common to carry a fairly high D/E ratio, as much of the physical plant and equipment is financed through debt. It is not uncommon for companies to rejigger their capital structure to take on more debt when interest rates are low. It's far more important to determine if their earnings (and/or cash flow) are sufficient to cover interest payments than it is to judge them on the D/E in and of itself. There's much more to it than the brief examples I've given here, such as the stage of the business and the evolution of their D/E during each phase of maturity, etc., but it does demonstrate one more reason why writing off a company simply because it's D/E is > 50% (or some other hurdle) is a dangerous practice. Katherine ----- Original Message ----- From: Curt Corley To: canslim@lists.xmission.com Sent: Tuesday, December 03, 2002 8:57 PM Subject: RE: [CANSLIM] NXTL, SXT The web-based stock diagnosis service (located on a site that we all know and love and which will remain nameless) gives these two stocks high overall ratings. But I don't agree with the ratings. I have Stock Investor Pro screener, and I set it up to look at all the factors that WON mentions in his most recent edition of HTMMIS. Both SXT and NXTL look extremely disappointing to me. Here's the list of fundamentals that are below standard according to HTTMIS: SXT: (1) Compounded annual EPS growth from continuing operations over the last 3 years is -5.1%. (2) Twelve-month ROE is only 11.3%. (3) Twelve-month Pretax profit margin is only 12.5% (4) Twelve-month After-tax profit margin is down to 8.7% from 9.3% 3 years ago. (5) Long-term Debt/Equity ratio for the most recent quarter is a whopping 103.9! This is an all-time high. (6) 12-month Cash-Flow per share is 1.2% less than 12-month EPS. NXTL: (1) 12-month EPS is -2.10. (2) Compounded annual EPS growth from continuing operations over the last 3 years is -12.6% (-27.9% over the last 5 years) (3) Quarterly Sales is only 14.4% (4) Annual sales growth is decelerating. (5) Pretax profit margin is -18.1% (6) After-tax profit margin is -37.2% (which is not near it's all-time high) (7) High Long-Term Debt/Equity ratio. (8) 12-month Cash-Flow-Per-Share is -110% less than 12-month EPS. I agree with the guidelines and rules set forth by WON, but I treat the ratings with a grain of salt. According to a popular financial paper (and its associated web site), there will always be 200 stocks out of every 10,000 that are going to look good in each category -- no matter what -- simply because they are in the top 20% of all stocks for that category. In reality, there are currently less than 50 stocks that meet all of the criteria set forth in HTMMIS. In fact, my pickiest WON stock screen only came up with 15 stocks. After looking at the charts, the pickings are even slimmer. Now, I'm certainly not saying that there will be only 15 stocks that will give you good returns. And I'm also not saying that you cannot make good money using the unnamed paper and web site for a reference. I subscribe to that paper myself. I do, however, believe you shouldn't assume a stock in the top 20% has good fundamentals. I also believe you can pick CANSLIM stocks a lot easier using a good stock screener. Since most of us aren't burdened with the task of finding places to invest millions of dollars, we can afford to be picky and buy only the best. Curt -----Original Message----- From: owner-canslim@lists.xmission.com [mailto:owner-canslim@lists.xmission.com] On Behalf Of Jeff Mulder Sent: Tuesday, December 03, 2002 7:16 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] NXTL, SXT I'm not interested in SXT. I was responding to a request for technical and fundamental opinions regarding SXT and NXTL. - Jeff ----- Original Message ----- From: "Norman Boyd" To: Sent: Sunday, December 01, 2002 10:04 PM Subject: Re: [CANSLIM] NXTL, SXT > Jeff, > > May I ask why you are interested in this stock? From my view point there > are many better looking charts and fundamentals out there than this one. > Just curious. > > Norm > > ----- Original Message ----- > From: "Jeff Mulder" > To: > Sent: Sunday, December 01, 2002 8:39 PM > Subject: Re: [CANSLIM] NXTL, SXT > > > > SXT is in a better buying position now than a week ago. Price has > tightened > > up nicely while clarifying short-term support. However, as Tom pointed > out, > > you probably won't get much juice from this one. > > > > SXT's group looks good. The Media General Industry Average is > consolidating > > at new highs. > > > > - Jeff > > > > ----- Original Message ----- > > From: > > To: > > Sent: Saturday, November 23, 2002 5:14 PM > > Subject: [CANSLIM] NXTL, SXT > > > > > > > Looking for a little feed back, but heres my thoughts, thinking about > > buying > > > these two Mon. > > > SXT 84/90 BAA, I like the chart, not too extended at this point. Volume > > has > > > been slightly higher but not real great. Earning are good and they have > > been > > > buying smaller companies that will provide some synergies. I know there > > are > > > 47 mil shares outstanding but do not know what the float is, if anyone > has > > a > > > link to where I can find the float on different companies please post, > > > thanks. > > > > > > NXTL 80/99 ADA, chart also looks good, earnings are getting better, and > > the > > > company is doing a good job of paying down dept. > > > > > > Any feed back is appreciated. > > > > > > Thanks Chris > > > > > > - > > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > > -In the email body, write "subscribe canslim" or > > > -"unsubscribe canslim". Do not use quotes in your email. > > > > > > > > > > > - > > -To subscribe/unsubscribe, email "majordomo@xmission.com" > > -In the email body, write "subscribe canslim" or > > -"unsubscribe canslim". Do not use quotes in your email. > > > > > > > - > -To subscribe/unsubscribe, email "majordomo@xmission.com" > -In the email body, write "subscribe canslim" or > -"unsubscribe canslim". Do not use quotes in your email. > - -To subscribe/unsubscribe, email "majordomo@xmission.com" -In the email body, write "subscribe canslim" or -"unsubscribe canslim". Do not use quotes in your email. - -To subscribe/unsubscribe, email "majordomo@xmission.com" -In the email body, write "subscribe canslim" or -"unsubscribe canslim". Do not use quotes in your email. - ------=_NextPart_000_1D19_01C29C53.921455A0 Content-Type: text/html; charset="iso-8859-1" Content-Transfer-Encoding: quoted-printable
Hi Curt,
 
I think you've identified the = stickier=20 issues in CANSLIM and interpreting WON's work. As both Tom and Andy have = pointed=20 out in their posts, while WON may *seem* to be stating that ROE>=3D17 = is a=20 "minimum requirement' it turns out it is a guidepost to lead you to = better=20 quality stocks. As with other indicators, this is based on his = historical view=20 of winning stocks, meaning that "on average" winning stocks had an = ROE>=3D17.=20 As with D/E, ROE can be misleading. For example, if a company rejiggers = their=20 capital structure and increases their outstanding shares, this will have = an=20 immediate impact on the ROE measure. Another way of viewing it would = simply be=20 by asking a question. That is, if you were looking at a stock and it had = a=20 "perfect" cup with handle (ok, it's theoretical!); high RS Rank; an RS = line=20 making new highs; met all other earnings, sales and profit margin = guidelines,=20 and broke out on 150% of ADV, would you pass it up because it had an ROE = of=20 16.5%? If so, why? Does the "low" ROE mean that it is not a good company = or a=20 good stock?
 
Katherine
-----Original Message-----
From:=20 owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of Curt=20 Corley
Sent: Wednesday, December 04, 2002 6:45 = PM
To:=20 canslim@lists.xmission.com
Subject: RE: [CANSLIM] NXTL,=20 SXT

Hi=20 Katherine,

 

Thanks for = your=20 input.  I agree with you = and=20 appreciate your interpretation of HTTMIS for the most part.  Although I did not mention = it, I do=20 compare D/E to the other companies within the same industry.  I depart from your = interpretation,=20 however, regarding the meaning of the values.  If I really want to follow = WON=92s guidelines, I have to consider some of = those values=20 as solid criteria to be met =96 not just =93typical=94 or = =93average=94 values for=20 winning stocks over time.  = Take=20 ROE for instance.  = According to my=20 interpretation of the blue book, Chapter 20 clearly states what the = ROE should=20 be before you buy a stock.  = If the=20 ROE is below that amount, it doesn=92t even show up on my radar.  And that=92s a good thing = (at least for=20 me), because I don=92t have to devote time to find excuses as to why = it didn=92t=20 meet that criterion.  = For me: the=20 more strict the interpretation, the better. After devoting time to my = family,=20 my job, and other obligations (not to mention the down-time I allow = myself =96=20 including the time spent on the CANSLIM Digest list), I don=92t have = very much=20 time to devote to fundamental and technical analysis of stock = candidates.  So I would prefer to keep my = stock=20 candidates down to at least two dozen different stocks a=20 week.

 

Once again, = thanks=20 for your input.  As = always, you=92re=20 an excellent contributor to this list and one of the reasons the list = will=20 probably still be around 5 years from = now.

 

Cheers,

Curt

 

-----Original=20 Message-----
From:=20 owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]=20 On Behalf Of Katherine = Malm
Sent: = Wednesday,=20 December 04, 2002 9:11 AM
To:=20 canslim@lists.xmission.com
Subject: Re: [CANSLIM] NXTL,=20 SXT

 

Hi=20 Curt,

 

Thanks for the data on SXT = and NXTL. I=20 also agree with you about being a picky investor and choosing only the = best.=20 I'd like to take exception, however, to the idea that all the hurdles = WON=20 mentions in HTMMIS must be met simultaneously in order for a stock to = be=20 considered "a good stock." WON provides guidelines for each of the = CANSLIM=20 criteria, but these are "typical" or "average" values for winning = stocks over=20 time. In other words, you are looking for the greatest representation = of=20 strength from each of these categories, or what I call the = "preponderance of=20 evidence" that the company is a leader, has been able to generate = growth in=20 earnings and revenues, produces excellent profitability for the = capital=20 employed, and has fuel for future growth. Take for example, the = tendency of=20 accounting reporting to lag. By the time it is reported, it's past = history.=20 The price of the stock, on the other hand, is anticipating future = earnings.=20 So, if the technicals show sound accumulation and the preponderance of = evidence of fundamentals and due diligence shows a pattern of growth = and=20 leadership, it's not necessary that each and every CANSLIM fundamental = "typical" recommendation be met.

 

I'm not arguing for = NXTL...but I can use=20 it as an example. 12 month EPS is -2.10, however, this includes a = value=20 from 4 quarters ago of  -2.25, a bathtub quarter that = included some=20 unusual one time charges that couldn't be backed out of the pro forma = number.=20 More importantly, however, the most recent 2 quarters have been a = positive .35=20 and .55, showing 166% and 304%  growth in earnings over the same = quarter=20 in the prior year. As a result, the TTM ROE is also going to lag. Now, = you=20 have 3 hurdles being missed simultaneously as a result of one bathtub = quarter=20 (EPS growth, ROE and raw EPS) because each of these accounting = measures is=20 inter-related. It also doesn't recognize the *turnaround* in the = pattern of=20 earnings over the last 2 quarters, something WON has talked about in = the past=20 as an important indicator after a company has gone through tough=20 times.

 

One last example, i.e., the = hurdle for=20 the D/E ratio. While WON suggests that "lower is better" it is also = important=20 to compare the D/E to other stocks in the same industry. For example, = in=20 highly capital intensive industries it is common to carry a fairly = high D/E=20 ratio, as much of the physical plant and equipment is financed through = debt.=20 It is not uncommon for companies to rejigger their capital structure = to take=20 on more debt when interest rates are low. It's far more important to = determine=20 if their earnings (and/or cash flow) are sufficient to cover = interest=20 payments than it is to judge them on the D/E in and of itself. There's = much=20 more to it than the brief examples I've given here, such as the stage = of the=20 business and the evolution of their D/E during each phase of maturity, = etc.,=20 but it does demonstrate one more reason why writing off a company = simply=20 because it's D/E is > 50% (or some other hurdle) is a dangerous=20 practice.

 

Katherine

----- Original Message = - -----=20

From: Curt = Corley=20

To: canslim@lists.xmission.com= =20

Sent:=20 Tuesday, December 03, 2002 8:57 = PM

Subject: RE:=20 [CANSLIM] NXTL, SXT

 

The web-based stock = diagnosis service=20 (located on a site that we all
know and love and which will = remain=20 nameless) gives these two stocks
high overall ratings.  But = I don't=20 agree with the ratings.

I have Stock Investor Pro screener, = and I set=20 it up to look at all the
factors that WON mentions in his most = recent=20 edition of HTMMIS.  Both
SXT and NXTL look extremely = disappointing=20 to me.  Here's the list of
fundamentals that are below = standard=20 according to HTTMIS:

SXT:
(1) Compounded annual EPS = growth from=20 continuing operations over the
last 3 years is -5.1%.  =
(2)=20 Twelve-month ROE is only 11.3%. 
(3) Twelve-month Pretax = profit=20 margin is only 12.5%
(4) Twelve-month After-tax profit margin is = down to=20 8.7% from 9.3% 3
years ago.
(5) Long-term Debt/Equity ratio = for the=20 most recent quarter is a
whopping 103.9!  This is an = all-time=20 high.
(6) 12-month Cash-Flow per share is 1.2% less than 12-month = EPS.=20

NXTL:
(1) 12-month EPS is -2.10.
(2) Compounded annual = EPS=20 growth from continuing operations over the
last 3 years is -12.6% = (-27.9%=20 over the last 5 years)
(3) Quarterly Sales is only 14.4%
(4) = Annual=20 sales growth is decelerating.
(5) Pretax profit margin is = - -18.1%
(6)=20 After-tax profit margin is -37.2% (which is not near it's=20 all-time
high)
(7) High Long-Term Debt/Equity ratio.
(8) = 12-month=20 Cash-Flow-Per-Share is -110% less than 12-month EPS.

I agree = with the=20 guidelines and rules set forth by WON, but I treat the
ratings = with a=20 grain of salt.  According to a popular financial paper
(and = its=20 associated web site), there will always be 200 stocks out = of
every 10,000=20 that are going to look good in each category -- no matter
what -- = simply=20 because they are in the top 20% of all stocks for = that
category.  In=20 reality, there are currently less than 50 stocks that meet
all of = the=20 criteria set forth in HTMMIS.  In fact, my pickiest WON = stock
screen=20 only came up with 15 stocks.  After looking at the charts,=20 the
pickings are even slimmer.

Now, I'm certainly not = saying that=20 there will be only 15 stocks that
will give you good = returns.  And=20 I'm also not saying that you cannot
make good money using the = unnamed=20 paper and web site for a reference.  I
subscribe to that = paper=20 myself.  I do, however, believe you shouldn't
assume a stock = in the=20 top 20% has good fundamentals.  I also believe you
can pick = CANSLIM=20 stocks a lot easier using a good stock screener. 

Since = most of=20 us aren't burdened with the task of finding places to
invest = millions of=20 dollars, we can afford to be picky and buy only=20 the
best.
 
Curt

-----Original = Message-----
From: owner-canslim@lists.xmis= sion.com
[mailto:owner-canslim@lists.xmission.com]=20 On Behalf Of Jeff Mulder
Sent: Tuesday, December 03, 2002 7:16 = PM
To:=20 canslim@lists.xmission.com=
Subject:=20 Re: [CANSLIM] NXTL, SXT

I'm not interested in SXT.  I = was=20 responding to a request for technical
and
fundamental opinions = regarding SXT and NXTL.

- Jeff

----- Original Message=20 -----
From: "Norman Boyd" <theboyd@tisd.net>
To: = <canslim@lists.xmission.com= >
Sent:=20 Sunday, December 01, 2002 10:04 PM
Subject: Re: [CANSLIM] NXTL,=20 SXT


> Jeff,
>
> May I ask why you are = interested=20 in this stock?  From my view point
there
> are many = better=20 looking charts and fundamentals out there than this
one.
> = Just=20 curious.
>
> Norm
>
> ----- Original Message = -----
> From: "Jeff Mulder" <jeff@mulder.com>
> To: = <canslim@lists.xmission.com= >
>=20 Sent: Sunday, December 01, 2002 8:39 PM
> Subject: Re: = [CANSLIM] NXTL,=20 SXT
>
>
> > SXT is in a better buying position = now than=20 a week ago.  Price has
> tightened
> > up nicely = while=20 clarifying short-term support.  However, as = Tom
pointed
>=20 out,
> > you probably won't get much juice from this = one.
>=20 >
> > SXT's group looks good.  The Media General = Industry=20 Average is
> consolidating
> > at new highs.
>=20 >
> > - Jeff
> >
> > ----- Original = Message=20 -----
> > From: <Vanchee1@aol.com>
> = > To:=20 <canslim@lists.xmission.com= >
>=20 > Sent: Saturday, November 23, 2002 5:14 PM
> > Subject: = [CANSLIM] NXTL, SXT
> >
> >
> > > = Looking for=20 a little feed back, but heres my thoughts, thinking
about
> = >=20 buying
> > > these two Mon.
> > > SXT 84/90 = BAA, I=20 like the chart, not too extended at this point.
Volume
> = >=20 has
> > > been slightly higher but not real great. = Earning are=20 good and they
have
> > been
> > > buying = smaller=20 companies that will provide some synergies. I know
there
> = >=20 are
> > > 47 mil shares outstanding but do not know what = the=20 float is, if
anyone
> has
> > a
> > > = link to=20 where I can find the float on different companies = please
post,
>=20 > > thanks.
> > >
> > > NXTL 80/99 = ADA, chart=20 also looks good, earnings are getting
better,
and
> > = the
> > > company is doing a good job of paying down=20 dept.
> > >
> > > Any feed back is=20 appreciated.
> > >
> > > Thanks = Chris
> >=20 >
> > > -
> > > -To = subscribe/unsubscribe, email=20 "majordomo@xmission.com"
>= ;=20 > > -In the email body, write "subscribe canslim" or
> = > >=20 -"unsubscribe canslim".  Do not use quotes in your = email.
> >=20 >
> >
> >
> >
> > -
> = > -To=20 subscribe/unsubscribe, email "majordomo@xmission.com"
>= ;=20 > -In the email body, write "subscribe canslim" or
> >=20 -"unsubscribe canslim".  Do not use quotes in your = email.
>=20 >
> >
>
>
> -
> -To=20 subscribe/unsubscribe, email "majordomo@xmission.com"
>= ; -In=20 the email body, write "subscribe canslim" or
> -"unsubscribe=20 canslim".  Do not use quotes in your = email.
>


-
-To=20 subscribe/unsubscribe, email "majordomo@xmission.com"
-In= the=20 email body, write "subscribe canslim" or
-"unsubscribe = canslim".  Do=20 not use quotes in your email.


-
-To = subscribe/unsubscribe,=20 email "majordomo@xmission.com"
-In= the=20 email body, write "subscribe canslim" or
-"unsubscribe = canslim".  Do=20 not use quotes in your=20 email.

- ------=_NextPart_000_1D19_01C29C53.921455A0-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ Date: Thu, 5 Dec 2002 14:00:32 -0600 From: "Katherine Malm" Subject: RE: [CANSLIM] NXTL, SXT This is a multi-part message in MIME format. - ------=_NextPart_000_1D29_01C29C66.AD521470 Content-Type: text/plain; charset="UTF-8" Content-Transfer-Encoding: quoted-printable Hi Tim, =20 I think you=E2=80=99ve given an excellent example of =E2=80=9Coverly = restrictive=E2=80=9D and =E2=80=9Coverlapping=E2=80=9D mining criteria. = To demonstrate what I mean, I=E2=80=99ve first recategorized each of the = criteria you listed into =E2=80=9Craw vs. composite=E2=80=9D and = =E2=80=9Cfundamental vs. technical=E2=80=9D groupings: =20 Raw Fundamental: % Change in Latest Quarter's EPS vs. Same Quarter Prior Year Greater = than or equal to: 25=20 EPS Have Been Accelerating Over the Latest 3 Quarters (%) True=20 Annual % EPS Growth Rate of Last 3 Years Greater than or equal to: 25=20 % Change Latest Quarter's Sales vs. Same Quarter Prior Year Greater than = or equal to: 25=20 Sales Have Been Accelerating Over the Latest 3 Quarters (%) True=20 After Tax Profit Margin (Most Recent Reported Quarter) Greater than or = equal to: 10=20 Pre-tax Annual Margins (Latest Fiscal Year Reported) Greater than or = equal to: 18=20 ROE (Latest Fiscal Year Reported) Greater than or equal to: 17=20 =20 Composite Fundamental: Earnings Per Share (EPS) Rating From 80 to 99=20 Sales + Profit Margins + ROE (SMR) Rating A, B, C=20 =20 Raw Technical: Relative Price Strength (RS) Rating From 80 to 99=20 Percentage price is below 52-Week High From 0 to 15 (and Stocks trading = at new 52-Week High)=20 =20 Composite Technical: Industry Group Relative Strength (GRP RS) Rating A, B=20 Accumulation/Distribution (Acc/Dis) Rating A, B, C =20 Composite Technical and Fundamental:=20 SmartSelect=C2=AE Composite Rating From 80 to 99=20 =20 Institutional Summaries used to =E2=80=9Cgauge=E2=80=9D price/volume = action and =E2=80=9Cquality=E2=80=9D of ownership: Sponsorship Rating A, B, C=20 % of Stock Owned by Mutual Funds Greater than or equal to: 1=20 % of the number of Mutual Funds Owning for Current Quarter vs. Prior = Quarter Greater than or equal to: 1=20 =20 Liquidity Minimums: Current Price Greater than or equal to: 15.000=20 Current 50-Day Average Volume(1000) Greater than or equal to: 100=20 Exchange NYSE, AMEX, NASDAQ=20 =20 =20 While the IBD and O=E2=80=99Neil have intended to give their = readers/subscribers additional tools, they have also done a bit of a = disservice by not clearly explaining their use. For example, in the list = of criteria in your screen, you list all the recommended raw fundamental = scores AND the EPS/SMR composite fundamental scores AND the COMPOSITE = score. The EPS and SMR ranks are based on combining all the raw = fundamental data into a summary indicator. Because the rankings are = proprietary, we have no precise way of determining how each of the = accounting data is weighted, but what we do know is that by including = both in a screen, you are essentially requiring the stock to meet the = same hurdle twice. Now add in the Comp ranking on top of that, which = combines both fundamental and technical data, and you are requiring a = stock to meet a summary indicator of a summary indicator of raw data = again.=20 =20 The same holds true for technical data. There is the simple price/volume = action in the chart that, when combined with the RS Rank and the = direction of the RS Line tells you what the stock is doing right now. = Summary indicators such as A/D, etc. are interpretive elements based on = the very same price/volume action. They are not additional indicators, = but instead summary indicators of price/volume. If you add all of these = and the COMP ranking and the group ranking, the same thing = happens=E2=80=A6 once again a summary indicator of a summary indicator = of raw data. =20 Stated more simply, one could either take a =E2=80=9Csimple=E2=80=9D = swipe at stocks by taking the ultimate summary indicator to find stocks = that are technically and fundamentally sound based on the = =E2=80=9Cpreponderance of evidence=E2=80=9D, or they could take each of = the raw requirements and set a meaningful mining point. For example, = (I=E2=80=99m using settings from your original screen), one could take: =20 COMP score >=3D80=E2=80=94This by itself, as it is a summary indicator = of =E2=80=9Call things CANSLIM=E2=80=9D =20 *or* =20 A separate screen that looked for summary fundamental/technical = strength: SMR <> D, E=20 + EPS >=3D 80 + RS>=3D 80 + A/D <> D, E =20 *or* =20 All raw fundamental indicators + All raw technical indicators. =20 Aside from the combinatorial issues, there is also the issue of = =E2=80=9Cinterpreting=E2=80=9D each of the guidelines. Here are just a = couple of examples: =20 - -RS Rank >=3D80--While WON suggests the investor confines most of their = buying to stocks with RSRank>=3D80, he never says that one should = restrict all purchases to RSRank>=3D80. In fact, many leading stocks = such as Dell in the mid-90=E2=80=99s broke out of very sound bases when = their RSRank was in the 70=E2=80=99s. As a cut off for mining, it would = still be within O=E2=80=99Neil=E2=80=99s guidelines, as he simply states = that RS<70 is a laggard. Avoiding laggards is the goal, so mining lower = and purchasing with RS>=3D70 is not in violation of his work. =20 - - Industry Group Relative Strength (GRP RS) Rating A, B: While WON = suggests that you place most of your emphasis on purchasing stocks from = the top 25% of industries, he does not say restrict your purchases. It = is true that stocks run in packs and that there is an advantage to = selecting a stock from a leading industry (it's a risk reduction = technique), but that is not the same thing as saying = =E2=80=9Cdon=E2=80=99t buy stocks from industries that are not in the = top 25%.=E2=80=9D A good stock can be a leader in its industry and will = lead the group up from a low GRS ranking. Waiting until the majority of = the stocks in the group are performing well, means missing the best of = the move in the leaders as they break out of sound bases and run = up=E2=80=A6pulling the rest of the group in their wake. =20 I think you could take each of the guidelines and evaluate them in the = same way. Again, the idea is to lead your eye to strength and then, = based on the preponderance of evidence select the best stocks possible. = Even with all the data in the screen, it still doesn=E2=80=99t mean that = stocks are technically healthy. I=E2=80=99m convinced (or maybe I should = say, the Bear reminded me) that the most important part of mining is to = look for sound technicals first, then evaluate the fundamentals and = misc. factors for the best combination of past performance and future = potential. As both you and David have demonstrated with your example, = overly restrictive mining criteria will cause one to overlook good = stocks. =20 Here are a couple of articles from the Investor=E2=80=99s Corner on the = subject: http://Wallstreet-LLC.com/canslim/NotEveryStockIsPerfect.JPG http://Wallstreet-LLC.com/canslim/GreatStocksNotFlawless.JPG =20 Katherine -----Original Message----- From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tim Katona Sent: Thursday, December 05, 2002 10:24 AM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] NXTL, SXT David, Thanks for the suggestion. I took all these out and still zero. I then took our the group RS and = got zero as well.=20 Tim -----Original Message----- From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of David Taggart Sent: Thursday, December 05, 2002 5:38 AM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] NXTL, SXT Tim, Try running that screen without the 52 week high, any of the RS, and = Average Volume filters and see if anything meets the fundamental = criteria. I wonder if you get anything. David Taggart -----Original Message----- From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tim Katona Sent: Wednesday, December 04, 2002 10:17 PM To: canslim@lists.xmission.com Subject: RE: [CANSLIM] NXTL, SXT As an interesting data point related to this discussion, I created = the following custom screen on DGO to check for all of IBD's 20 rules. = I've run this for almost daily for a year and NEVER has it come up with = a single stock that met the complete criteria. Granted we've been a = terrible bear market. Hopefully in a real bull market it will flag some = stocks to buy!=20 Tim TK custom Screen Criteria and Parameters=20 Earnings Per Share (EPS) Rating From 80 to 99=20 Relative Price Strength (RS) Rating From 80 to 99=20 Industry Group Relative Strength (GRP RS) Rating A, B=20 Sales + Profit Margins + ROE (SMR) Rating A, B, C=20 Accumulation/Distribution (Acc/Dis) Rating A, B, C=20 SmartSelect=C2=AE Composite Rating From 80 to 99=20 % Change in Latest Quarter's EPS vs. Same Quarter Prior Year = Greater than or equal to: 25=20 EPS Have Been Accelerating Over the Latest 3 Quarters (%) True=20 Annual % EPS Growth Rate of Last 3 Years Greater than or equal to: = 25=20 % Change Latest Quarter's Sales vs. Same Quarter Prior Year = Greater than or equal to: 25=20 Sales Have Been Accelerating Over the Latest 3 Quarters (%) True=20 Sponsorship Rating A, B, C=20 % of Stock Owned by Mutual Funds Greater than or equal to: 1=20 % of the number of Mutual Funds Owning for Current Quarter vs. = Prior Quarter Greater than or equal to: 1=20 Current Price Greater than or equal to: 15.000=20 Stocks trading at new 52-Week High AND Percentage price is below = 52-Week High From 0 to 15=20 Current 50-Day Average Volume(1000) Greater than or equal to: 100=20 After Tax Profit Margin (Most Recent Reported Quarter) Greater = than or equal to: 10=20 Pre-tax Annual Margins (Latest Fiscal Year Reported) Greater than = or equal to: 18=20 ROE (Latest Fiscal Year Reported) Greater than or equal to: 17=20 Exchange NYSE, AMEX, NASDAQ=20 Note: SmartSelect registered trademark is the property of WON & = co. TK custom Screen Criteria and Parameters copyright of Tim Katona = but canslim@lists.xmission.com has my permission to use it :) -----Original Message----- From: owner-canslim@lists.xmission.com = [mailto:owner-canslim@lists.xmission.com]On Behalf Of AJAskey@aol.com Sent: Wednesday, December 04, 2002 8:38 PM To: canslim@lists.xmission.com Subject: Re: [CANSLIM] NXTL, SXT Curt, Many of the characteristics of CANSLIM are defined by WON as = "secondary". He is careful not to say stocks "need" to meet these at = breakout as some breakout and then achieve perfect CANSLIM fundies. =20 Some discussion by IBD can be found at the IBD AskBill site. = IBDs take on ROE is at = http://www.investors.com/askbill/ArcRead.asp?D=3D8/21/2002. IBDs take = on Debt to Equity is at = http://www.investors.com/askbill/ArcRead.asp?D=3D10/17/2002. If you get = a few hours it is educational to go thru the archieve and get more = specific answers to questions that at not clear in HTMMIS. =20 Another source that can be used is the AskIBD link at = http://investdaily.custhelp.com/cgi-bin/investdaily.cfg/php/enduser/std_a= lp.php which is searchable and can provide multiple answers to = questions. Sometimes the multiple answers even agree with each other = ... LOL. Andy In a message dated 12/4/2002 6:47:51 PM Central Standard Time, = cjcorley@hiwaay.net writes: Take ROE for instance. According to my interpretation of the = blue book, Chapter 20 clearly states what the ROE should be before you = buy a stock. If the ROE is below that amount, it doesn=E2=80=99t even = show up on my radar.=20 - ------=_NextPart_000_1D29_01C29C66.AD521470 Content-Type: text/html; charset="UTF-8" Content-Transfer-Encoding: quoted-printable =EF=BB=BF

Hi=20 Tim,

 

I think=20 you=E2=80=99ve given an excellent example of =E2=80=9Coverly = restrictive=E2=80=9D and =E2=80=9Coverlapping=E2=80=9D=20 mining criteria.  To = demonstrate=20 what I mean, I=E2=80=99ve first recategorized each of the criteria you = listed into =E2=80=9Craw=20 vs. composite=E2=80=9D and =E2=80=9Cfundamental vs. technical=E2=80=9D = groupings:

 

Raw=20 Fundamental:

% Change=20 in Latest Quarter's EPS vs. Same Quarter Prior Year Greater than or = equal to: 25=20

EPS Have=20 Been Accelerating Over the Latest 3 Quarters (%) True

Annual %=20 EPS Growth Rate of Last 3 Years Greater than or equal to: 25

% Change=20 Latest Quarter's Sales vs. Same Quarter Prior Year Greater than or equal = to: 25=20

Sales=20 Have Been Accelerating Over the Latest 3 Quarters (%) True

After=20 Tax Profit Margin (Most Recent Reported Quarter) Greater than or equal = to: 10=20

Pre-tax=20 Annual Margins (Latest Fiscal Year Reported) Greater than or equal to: = 18=20

ROE=20 (Latest Fiscal Year Reported) Greater than or equal to: 17

 

Composite=20 Fundamental:

Earnings=20 Per Share (EPS) Rating From 80 to 99

Sales +=20 Profit Margins + ROE (SMR) Rating A, B, C

 

Raw=20 Technical:

Relative=20 Price Strength (RS) Rating From 80 to 99

Percentage price is below 52-Week = High From 0=20 to 15 (and Stocks trading at new 52-Week High)

 

Composite=20 Technical:

Industry=20 Group Relative Strength (GRP RS) Rating A, B

Accumulation/Distribution (Acc/Dis) = Rating A,=20 B, C

 

Composite  Technical and Fundamental:=20

SmartSelect=C2=AE Composite Rating = From 80 to 99=20

 

Institutional Summaries used to = =E2=80=9Cgauge=E2=80=9D=20 price/volume action and =E2=80=9Cquality=E2=80=9D of = ownership:

Sponsorship Rating A, B, C =

% of=20 Stock Owned by Mutual Funds Greater than or equal to: 1

% of the=20 number of Mutual Funds Owning for Current Quarter vs. Prior Quarter = Greater than=20 or equal to: 1

 

Liquidity = Minimums:

Current=20 Price Greater than or equal to: 15.000

Current=20 50-Day Average Volume(1000) Greater than or equal to: 100

Exchange  NYSE, AMEX, NASDAQ =

 

 

While the IBD and = O=E2=80=99Neil have=20 intended to give their readers/subscribers additional tools, they have = also done=20 a bit of a disservice by not clearly explaining their use. For example, = in the=20 list of criteria in your screen, you list all the recommended raw = fundamental=20 scores AND the EPS/SMR composite fundamental scores AND the COMPOSITE = score. The=20 EPS and SMR ranks are based on combining all the raw fundamental data = into a=20 summary indicator.  = Because the=20 rankings are proprietary, we have no precise way of determining how each = of the=20 accounting data is weighted, but what we do know is that by including = both in a=20 screen, you are essentially requiring the stock to meet the same hurdle = twice.=20 Now add in the Comp ranking on top of that, which combines both = fundamental and=20 technical data, and you are requiring a stock to meet a summary = indicator of a=20 summary indicator of raw data again.

 

The same holds true = for technical=20 data. There is the simple price/volume action in the chart that, when = combined=20 with the RS Rank and the direction of the RS Line tells you what the = stock is=20 doing right now. Summary indicators such as A/D, etc. are interpretive = elements=20 based on the very same price/volume action. They are not = additional=20 indicators, but instead summary indicators of price/volume. If you add = all of=20 these and the COMP ranking and the group ranking, the same = thing=20 happens=E2=80=A6 once again a summary indicator of a summary = indicator of raw data.

 

Stated more simply, = one could=20 either take a =E2=80=9Csimple=E2=80=9D swipe at stocks by taking the = ultimate summary indicator=20 to find stocks that are technically and fundamentally sound based on the = =E2=80=9Cpreponderance of evidence=E2=80=9D, or they could take each of = the raw requirements and=20 set a meaningful mining point. For example, (I=E2=80=99m using settings = from your=20 original screen), one could take:

 

COMP score = >=3D80=E2=80=94This by=20 itself, as it is a summary indicator of =E2=80=9Call things = CANSLIM=E2=80=9D

 

*or*

 

A separate screen = that looked for=20 summary fundamental/technical strength:

SMR <> D, E =

+ EPS >=3D  80

+ RS>=3D 80

+ A/D <> D, = E

 

*or*

 

All raw fundamental=20 indicators

+ All raw technical=20 indicators.

 

Aside from the = combinatorial=20 issues, there is also the issue of=20  =E2=80=9Cinterpreting=E2=80=9D each of the guidelines. Here = are just a couple of=20 examples:

 

-RS Rank = >=3D80--While WON=20 suggests the investor confines most of their buying to stocks with=20 RSRank>=3D80, he never says that one should restrict all = purchases to=20 RSRank>=3D80. In fact, many leading stocks such as Dell in the = mid-90=E2=80=99s broke=20 out of very sound bases when their RSRank was in the 70=E2=80=99s. As a = cut off for=20 mining, it would still be within O=E2=80=99Neil=E2=80=99s guidelines, as = he simply states that=20 RS<70 is a laggard. Avoiding laggards is the goal, so mining lower = and=20 purchasing with RS>=3D70 is not in violation of his work.

 

-   Industry Group Relative Strength = (GRP RS)=20 Rating A, B: While WON = suggests that=20 you place most of your emphasis on purchasing stocks from the top 25% of = industries, he does not say restrict your purchases. It is true = that=20 stocks run in packs and that there is an advantage to selecting a stock = from a=20 leading industry (it's a risk reduction = technique), but that is not the same thing as saying = =E2=80=9Cdon=E2=80=99t buy stocks=20 from industries that are not in the top 25%.=E2=80=9D A good = stock can be a=20 leader in its industry and will lead the group up from a low GRS=20 ranking. Waiting until the = majority=20 of the stocks in the group are performing well, means missing the best of the move in = the=20 leaders as they break out of sound bases and run up=E2=80=A6pulling the = rest of the=20 group in their wake.

 

I think you could = take each of=20 the guidelines and evaluate them in the same way. Again, the idea is to = lead=20 your eye to strength and then, based on the preponderance of evidence = select the=20 best stocks possible. Even with all the data in the screen, it = still=20 doesn=E2=80=99t mean that stocks are technically healthy. I=E2=80=99m = convinced (or maybe I=20 should say, the Bear reminded me) that the most important part of mining = is to=20 look for sound technicals first, then evaluate the fundamentals and = misc.=20 factors for the best combination of past performance and future = potential. As=20 both you and David have demonstrated = with your=20 example, overly restrictive mining criteria will cause one to = overlook=20 good stocks.

 

Here are a couple of = articles=20 from the Investor=E2=80=99s Corner on the subject:

htt= p://Wallstreet-LLC.com/canslim/NotEveryStockIsPerfect.JPG

htt= p://Wallstreet-LLC.com/canslim/GreatStocksNotFlawless.JPG

 

Katherine

-----Original Message-----
From:=20 owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tim=20 Katona
Sent: Thursday, December 05, 2002 10:24 = AM
To:=20 canslim@lists.xmission.com
Subject: RE: [CANSLIM] NXTL,=20 SXT

David,
Thanks for the = suggestion.
 
I=20 took all these out and still zero. I then took our the group RS = and got=20 zero as well.
Tim
 
-----Original Message-----
From:=20 owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of David=20 Taggart
Sent: Thursday, December 05, 2002 5:38 = AM
To:=20 canslim@lists.xmission.com
Subject: RE: [CANSLIM] NXTL,=20 SXT

Tim,
 
Try running that screen without the 52 week high, any of = the RS,=20 and  Average Volume filters and see if anything meets the=20 fundamental criteria.  I wonder if you get=20 anything.
 
David Taggart
-----Original Message-----
From:=20 owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of Tim=20 Katona
Sent: Wednesday, December 04, 2002 10:17 = PM
To:=20 canslim@lists.xmission.com
Subject: RE: [CANSLIM] NXTL,=20 SXT

As an interesting data point related to = this=20 discussion, I created the following custom screen on DGO to check = for all=20 of IBD's 20 rules. I've run this for almost daily for = a year and=20 NEVER has it come up with a single stock that met the=20 complete criteria. Granted we've been a terrible bear market. = Hopefully in a real bull market it will flag some stocks = to buy!=20

Tim

TK custom Screen = Criteria and Parameters=20

Earnings Per Share = (EPS) Rating=20 From 80 to 99

Relative Price = Strength (RS)=20 Rating From 80 to 99

Industry Group = Relative Strength=20 (GRP RS) Rating A, B

Sales + Profit = Margins + ROE=20 (SMR) Rating A, B, C

Accumulation/Distribution=20 (Acc/Dis) Rating A, B, C

SmartSelect=C2=AE = Composite Rating=20 From 80 to 99

% Change in Latest = Quarter's EPS=20 vs. Same Quarter Prior Year Greater than or equal to: 25 =

EPS Have Been = Accelerating Over=20 the Latest 3 Quarters (%) True

Annual % EPS Growth = Rate of Last=20 3 Years Greater than or equal to: 25

% Change Latest = Quarter's Sales=20 vs. Same Quarter Prior Year Greater than or equal to: 25 =

Sales Have Been = Accelerating Over=20 the Latest 3 Quarters (%) True

Sponsorship Rating = A, B, C=20

% of Stock Owned by = Mutual Funds=20 Greater than or equal to: 1

% of the number of = Mutual Funds=20 Owning for Current Quarter vs. Prior Quarter Greater than or equal = to: 1=20

Current Price = Greater than or=20 equal to: 15.000

Stocks trading at = new 52-Week=20 High AND Percentage price is below 52-Week High From 0 to 15 =

Current 50-Day = Average=20 Volume(1000) Greater than or equal to: 100

After Tax Profit = Margin (Most=20 Recent Reported Quarter) Greater than or equal to: 10

Pre-tax Annual = Margins (Latest=20 Fiscal Year Reported) Greater than or equal to: 18

ROE (Latest Fiscal = Year Reported)=20 Greater than or equal to: 17

Exchange  NYSE, AMEX, NASDAQ=20

Note: SmartSelect = registered=20 trademark is the property of WON & co.   =20 TK custom Screen=20 Criteria and = Parameters=20 copyright of Tim Katona but canslim@lists.xmission.com=  has my=20 permission to use it=20 :)

-----Original Message-----
From:=20 owner-canslim@lists.xmission.com=20 [mailto:owner-canslim@lists.xmission.com]On Behalf Of=20 AJAskey@aol.com
Sent: Wednesday, December 04, 2002 = 8:38=20 PM
To: canslim@lists.xmission.com
Subject: = Re:=20 [CANSLIM] NXTL, SXT

Curt,

Many of the characteristics of CANSLIM are = defined=20 by WON as "secondary".  He is careful not to say stocks = "need" to=20 meet these at breakout as some breakout and then achieve perfect = CANSLIM=20 fundies. 

Some discussion by IBD can be found at = the IBD=20 AskBill site.  IBDs take on ROE is at http:= //www.investors.com/askbill/ArcRead.asp?D=3D8/21/2002. =20 IBDs take on Debt to Equity is at http= ://www.investors.com/askbill/ArcRead.asp?D=3D10/17/2002. =20 If you get a few hours it is educational to go thru the archieve = and get=20 more specific answers to questions that at not clear in = HTMMIS. =20

Another source that can be used is the AskIBD link at http://investdaily.custhelp.com/cgi-bin/investdaily.cfg/p= hp/enduser/std_alp.php=20 which is searchable and can provide multiple answers to = questions. =20 Sometimes the multiple answers even agree with each other ...=20 LOL.

Andy


In a message dated 12/4/2002 6:47:51 = PM=20 Central Standard Time, cjcorley@hiwaay.net writes:


Take ROE for instance.  According to my=20 interpretation of the blue book, Chapter 20 clearly states = what the=20 ROE should be before you buy a stock.  If the ROE is = below that=20 amount, it doesn=E2=80=99t even show up on my radar. =


- ------=_NextPart_000_1D29_01C29C66.AD521470-- - - - -To subscribe/unsubscribe, email "majordomo@xmission.com" - -In the email body, write "subscribe canslim" or - -"unsubscribe canslim". Do not use quotes in your email. ------------------------------ End of canslim-digest V2 #3073 ****************************** To unsubscribe to canslim-digest, send an email to "majordomo@xmission.com" with "unsubscribe canslim-digest" in the body of the message. For information on digests or retrieving files and old messages send "help" to the same address. Do not use quotes in your message.