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How to Use a Stock Screener

Sep 10, 2008
Everyone wants to know how to find a great stock to purchase. Where do you go to find such information? Who can you ask? Whom do you trust? While there are no guarantees when it comes to picking companies or predicting prices, there is a tool that is popular and helpful. It's called a screener and it can help you search through thousands of companies with the parameters you are looking for.

Screener Options
Screeners can give you an infinitely-long list of parameters to set for the search. The most common parameters include Share Price, Trading Volume, P/E Ratio, Industry, Dividends, Market Capitalization, and others.

Example #1: Microsoft-type Companies
Let's say you want to find a company similar to Microsoft. You could setup your screener with ranges close to MSFT:
- Share Price: $20 to $30
- Volume: 50 to 75 million shares per day
- Industry: Application Software
- Exchange: NASDAQ

Example #2: Low P/E Oil Companies
Let's say you want to find an oil company with a low Price to Earnings (P/E) ratio, poised for growth. You could setup your screener with these options:
- P/E Ratio: 10 to 15
- Volume: 1 million shares per day or higher
- Industry: Oil & Gas Drilling & Exploration

Example #3: Large-Cap Dividend Companies
Let's say you want to find a large company that pays a solid dividend. You could setup your screener with these options:
- Market Cap: 10 billion or higher
- Dividend: 8% per year or higher

Narrow the Results
After running your screener you may end up with hundreds or thousands of results. You can narrow the results down by adding more parameters or making the ranges smaller. Once your list is small enough you can start doing research on the individual companies and learning more about them. Look at their short-term and long-term charts to make sure they are going the direction you want them to. Also see what the professional analysts are saying about these companies.

Where to Find a Screener
There are many screeners on the internet and most of them are free. Nearly every online brokerage has one, although you may have to have an account with them to use it. You can find a simple stock screener at HowTheMarketWorks or a more extensive one at Yahoo! Finance.

Other Screeners
There are several different types of screeners out there, including ETF's, Mutual Funds, and Bonds.
About the Author
Nicholas Swezey is the creator of the Stock Market Game at HowTheMarketWorks.com.
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