I have been wanting to trade stocks for the longest time but I just did not know how to start. I have been doing my research and slowly I was able to understand what stock trading was all about. So when I recently came across BPI Trade, I found myself opening a trading account with the nearest BPI branch. Two weeks later (which is today), I received an email from them telling me that they have received my application. BPI, that was slow. Lucky for you, I have the time to wait and so I wait. On the same day that I applied for a trading account, I bought myself a second-hand book for PhP 290 which is called, How to Make Money in Stocks by William J. O’Neil.
I learned from that awesome book about the C-A-N-S-L-I-M system and so I started my research on which stocks registered in the Philippine Stock Exchange (PSE) I should buy.
So far, I have reached only the C and A parts and I already found out surprising and quite interesting information. Let me tell you first that C stands for Current Quarterly Earnings Per Share and A stands for Annual Earnings Increases. A stocks is a potential good buy if its C shows an increase of at least 20% from the same quarter of last year and its A shows a meaningful increase in the last five years. I downloaded from the PSE website the Consolidated Statements of Comprehensive Income of some of the biggest companies in the Philippines and their C’s and A’s are shown below:
The entries in bold red are the stocks that passed the C and A criteria I mentioned above. From these data, we can see that the only stocks in the list which is a potential good buy is Meralco (MER). Although the other companies in bold red passed, if you take a closer look at the C values, the increases are not that meaningful because the increases came from a very small (close to zero) values. For example, Ayala Land’s increase from 0.12 to 0.16 is not that meaningful although it is a 33.33% increase because the increase is only 0.04 which is a very small (close to zero) amount.
From my reasearch so far, Meralco is a potential good buy and I would probably buy it when my trading account has been approved. However, I would like to stress that there are other letters in the C-A-N-S-L-I-M system besides C and A which I haven’t worked on yet. Also, knowing which stocks to buy is not enough. You must also know when is the right time to buy or sell stocks. You will learn more about trading stocks from the book I mentioned here. I included links to the book as well as to BPI Trade and PSE for your easy reference. Happy trading!