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Stock screening is a procedure used to identify stocks that meet certain financial criteria. Prior to the Internet researching more than a couple of companies required at least a staff of professional analyst. Even then it would take weeks if not months to compile a list of companies that fulfilled the desired criteria. By that time the information gathered was out of date therefore you would have an idea of a company's standing but you could never be certain. Nowadays you can research hundreds of companies in a matter of seconds and compile the exact value of a company's stock. Not only has the Internet expedited the process of stock screening it has also eliminated fees you would have paid an analyst. MSN Money, Morningstar and Yahoo Finance are just a few sites that offer basic and advanced stock screeners for free.
The three components to a stock screener are set of variables, a database of businesses, and a screening engine that discovers the companies that fulfill those variables and returns a list of results.
Using a screener is rather simple. You begin by submitting answers to a series of questions. For example:
? Do you prefer small-cap or large-cap stocks?
? Are you searching for stocks that are at an all time high or companies with stocks that have decreased in value?
? What range for the P/E (price-to-earning) ratio is satisfactory?
After you input your qualifiers, the screener searches through companies on the major exchanges and displays a list that meets your search criteria. This is done by concentrating on measurable components affecting stock prices, stock screeners assist users by performing quantitative analysis Meaning, screening concentrates on tangible variables like volatility of market capitalization revenue and margins of profit, in addition to performance ratios such as the P/E ratio. For apparent reasons, a screener cannot be used to look for a company that produces "the best products".
If you are not satisfied with your search results you can refine the list by adjusting your desired qualifiers. Sophisticated screeners will let you refine generated search results, while the free screeners usually limit you to just the list. Whichever stock screener you use will bee better than none at all. |
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