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Basics Of A Stock Screener

Aug 17, 2007
The basic course of action of a Stock Screener is, of searching for companies that meet definite financial criterion. It has three components namely a database of companies, a set of variables and a screening engine that finds the companies that satisfy those variables and generates a list of matches.

Here, it can be the well admitted that selecting good stocks isn't easy at all. In the recent count there were over 17,000 publicly traded companies in the United States alone. The steep volume of companies makes zeroing in on a good stock quite difficult.

Similarly, the huge amount of data on the web doesn't make things any easier. It's actually a hard task to sort out the useful information from the worthless data. Fortunately, a Stock Screener can help you focus on the stocks that meet your standards and suit your strategy. Here we look at what a Stock Screener is and how it can work for you.

The Stock Screener features include a detailed technical and comparative company reports for each symbol along with hundreds of prescreens using both the technical and also the fundamental strategies. Each prescreen is connected and can be modified from the interface by the user.

This also includes a full technical report, standard and poors balance sheet, intra-day charting and the company profiles too. This combination of features makes the Stock Screener the most powerful screener available.

Using A Stock Screener

Using a Stock Screener can be quite easy. The good one will allow you to search using just about any metric or decisive factor you wish. When you finish inputting your answers, you get a list of stocks that meet your requirements. Seems simple, right!

Now, by focusing on the considerable factors affecting a stock's price, Stock Screener helps their users perform a quantitative analysis. In other words, because it, the screening focuses on tangible variables such as market capitalization, revenue, volatility and profit margins, as well as performance ratios such as the P/E ratio or debt-to-equity ratio. For many noticeable reasons, you cannot use a Stock Screener to search for a company that makes the best products.

Customizable Stock Screener

The major three of the best free Stock Screener on the web includes those offered by the Yahoo Finance, MSN Money and also the Morningstar. All three have basic and the advanced too.

The basic Stock Screener has a predestined set of variables whose values you set as your criteria. Let's consider for an example, one of the variables on the Morningstar basic Stock Screener is of lowest amount capitalization, for which you choose one of the six different values to be the smallest market cap you want to see in a company.

The more advanced Stock Screener demands more from investors. There are, in general, three parts to each criterion setting: the criterion variable, the value and the condition. The criterion is the given quantitative metric, such as the P/E ratio, and the value refers to the numerical constraint on the measure.

The condition refers to how you want your criterion to compare to the value. If, in case, you wanted your criterion to equal the value, you would use '='. If you wanted it to be greater than, you'd enter 'the greater than or equal to sign', and if you wanted it to be less than, you'd use 'less than or equal to sign'. Again for an example, if you wanted a P/E greater than 25, the variable would be the P/E ratio, the value would be 25 and the condition would be 'the greater than or equal to sign'.

Being that this is a text document it will not accept the above signs because they relate to HTML. If you are unfamiliar with the above signs just enter the phrase in Google and you will see the signs in the results that are brought up by Google.

Example: Enter "greater than or equal to" or "'less than or equal to ."

Although there are some good free Stock Screener out there on the web, if you want the very latest and the very best technology you will likely have to break down and get a subscription to a Stock Screener service.

Things To Watch Out For When Using Stock Screener

Although there are many other useful tools, the Stock Screener has some limitations. The following things should be kept in mind:

Most Stock Screeners includes only the quantitative factors. There are still many qualitative factors that are supposed to be kept in mind. No Stock Screener provides information about things like the pending lawsuits, labor problems or may be even the customer-satisfaction levels.

Stock Screeners uses databases that update on different schedules. Do not forget to check how fresh the data is, that is if a Stock Screener data isn't timely, then your search could be meaningless.

Always watch for industry specific blind spots. To understand better we can take the help of an example, like if you are searching for low P/E valuations, don't expect very many tech companies to show up.

Conclusion!

Remember, Stock Screener is not the "magic pill" for selecting stocks. Nothing will ever replace good old-fashioned nose-to-the-grindstone research.

However, a Stock Screener can always be a good place to start your research process as they can save time and narrow your options down to a more manageable group.
About the Author
William Smith the author provides much more financial information on many subjects as well as the secret to his success in the market along with 5 Free power stock picks emailed daily so grab your Free subscription on his website at Stock Screener (All is Free)
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