Stock screening. It’s one of the methods used by stock traders and investors every day to find potentially profitable stocks. It’s not a science though. Developing the perfect stock screen is an art and subject to interpretation. There’s no real formula that can be applied to everyone.
The purpose of screen stocks is to find stocks that match your required attributes for investment or trading,
When you screen for stocks, it’s possible to get a list of nothing or thousands of possible stocks to review. If this is happening to you, continue to tinker. In the end, you want to develop a stock screener that yields 15-20 stocks consistently. Of course, this is just the start. You’ll need to research them.
Most stock screeners online have pre-built screens. This is a nice start, but don’t get too comfortable. Most are faulty and you really want to screen based on your own personal criteria.
When I develop a stock screen, a few things I like to add into it are:
A. Show companies with positive operating cash flows.
B. Total debt/equity. I change this depending on the industry I’m looking at.
C. Companies that have at least $X in sales. Again, I’ll modify this depending on what exactly I’m looking for.
Of course, I add other things, but that’s just a start. Most stock investors/traders have many screens. To learn more, check out the links below. Basically, there’s no perfect stock screen out there. A screen is there to help you locate stocks for the type of investing or trading you’re looking to do. Take some time experimenting and see what you come up with. Check the financial sections of major search engines as they generally have stock screening web apps. MSN is a good place to start.
