The Ultimate Guide To Stock Screeners
There are over 5,500 stocks listed on the two main exchanges in the U.S. and thousands more in the over-the-counter markets. To sort through these and find the perfect stock for you, you need a powerful tool – the stock screener.
From an OTCBB stock screener to one for the main exchanges, this article will explain how to use these handy pieces of software and show you how to find the best screeners online today.
What is a Stock Screener?
If you are an investor looking for the perfect investment opportunity, you might be slightly put off by the sheer volume of stocks on the market today. NYSE, the world’s largest exchange, has around 2,800 companies; NASDAQ has just over 2,700. The over-the-counter (OTC) markets – or markets between two parties, without the use of a formal exchange – contain thousands more.
The sheer volume of stocks available for investing, as well as the massive amount of financial data you’d have to sort through just to begin to narrow down the list, requires some help. You can find this kind of help with a stock screener, a piece of software designed to help you narrow down stocks based on the criteria you want to use.
Have you ever used an online tool to find used cars? It works the same way. If you want, say, a four-door sedan from either Ford or GM, with less than 75,000 miles on it, priced for less than $9,000, you can input that criteria into the tool. With the click of one button, you’ll have effectively tossed out every used car in the market except for cars that match that criteria.
How Do You Use a Stock Screener?
A stock screener works the same way as the car finder tool. Let’s say you want to look for stocks that have a market cap of at least $250 million, with a price-to-earnings ratio of 15-20. Instead of hunting down every company that fits this description and sorting through their financial data – a process that could take hours, if not days – you can take a stock screener and put in that info.
When you hit the search button, presto – you have basically eliminated the vast majority of stocks out there in favor of the ones that you want.
You can also search by sector, by industry, whether or not they pay a dividend, average volume, 50-day moving average, and other important metrics. Whatever info you want to use to make a decision can be used to help you create the best list for your needs.
Below is a screenshot from the google stock screener showing stocks showing large cap stocks with a market capitalization above $100bn and a p/e ratio of less than 8.
3 Free Stock Screeners
The internet is littered with scores of stock screeners. Of course, as with any piece of software on the market today, there are free screeners and screeners that cost money. The debate over which is better really boils down to this: Do you want – or need – the advanced features that some paid screeners offer and many free screeners lack?
FINVIZ.com. FINVIZ’s screener gives you virtually every metric you can imagine to use. If you want to sort by trading volume you can; choose from relative, current, or average. If you want to pick stocks based on their current ratio, institutional ownership, or forward P/E ratio, you can do that, too. While sorting, you can see the latest price for the stock at a glance, while also having free access to charts and quotes. In my humble opinion this is one of the best free stock screeners around.
Google Finance is one example of a basic yet useful free screener that allows you to filter by exchange, sector, market capitalization, P/E ratio, dividend yield, 52-week price change, and a slew of other popular metrics.
Yahoo! Finance is another free screener from a major company that gives you a wealth of technical and fundamental factors you can use to select stocks. It also has preset screens that give you a pre-selected slate of companies that fall into a certain category, like bargain growth companies.
For paid screeners, Morningstar Premium offers a robust slate of options, including analytical reports on stocks and mutual funds, a screener that is more powerful than the free version, and daily alerts. The additional information and analysis you can get from Morningstar, one of the best financial rating companies out there, makes this option very attractive for many investors.
In the end, play around with free screeners to find the type of interface and options you want. Then you can decide if you want to make the leap into a paid service or not. Either way, having a stock screener by your side can help you find the perfect stock for you – and hopefully profit!