Strategies for using a Stock Market Screener

By Stock Research Pro • April 4th, 2011

Many investors use a stock market screener as a starting point in their stock research efforts as a way to filter for stocks that meet a specific set of criteria they have identified in the stocks they believe will make good investment candidates. Many of the available stock market screeners can be used to search through all of the major criteria that can be important to investors in order to be very specific in defining the attributes that are important to you as an investor.

Some of the Criteria You Can Search For

Taking the Yahoo! Finance stock market screener as an example, some of the criteria you can filter for in your search include:

  • Share Data- stock price, company market cap, dividend yield, beta
  • Sales and Profitability- revenue, profit margin
  • Valuation Ratios- Ratios including Price/Earnings, Price/Book, Price/Sales, Price/Earnings to Growth (PEG)
  • Analyst Estimates- One year and five year estimated earnings-per-share (EPS) growth

  • Some Stock Screening Ideas

    The following are some stock screening ideas you might consider, depending on your investor profile.

    Growth Stocks

    Growth stocks can be good stock choices for investors with good tolerance for risk and a relatively long investing timeframe. Some of the criteria growth stock investors can use for screening include:

  • Market cap of $500 million to $2 billion
  • a 5-year growth rate of 15% or greater
  • Estimated earnings growth of 15% or more for the next 5 years
  • Current ratio minimum of 1.5

  • GARP Stocks

    GARP (Growth at a Reasonable Price) stocks are for investors who are looking for a balance between growth and value. A GARP stock screen might include all of the growth stock parameters and a PEG (Price/Earnings to Growth) of less than 1.

    Value Stocks

    Value investing, made famous by well-known investors like Benjamin Graham and Warren Buffett, is about looking for good solid stocks that have temporarily fallen out of favor from the market, leading to good buying opportunities. Along with a PEG ratio of less than 1, a screen for value stocks might include:

  • Price/Earnings ratio of less than 18
  • Price/Book ratio of less than 3
  • Projected Earnings-per-Share (EPS) growth of at least 10% for the next two years
  • Current ratio minimum of 1.5
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    The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax advisor.

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