How to Use a Stock Screener
Posted on November 27, 2017 by Miranda Marquit

If you have decided that you want to pick stocks, one of the best things you can do is look for interesting choices with the help of a stock screener.

A stock screener can help you set criteria that are important for you as you get ideas. Good programs can help you narrow down available stocks so you can see what matches your rules.

It’s hard to go through each stock and evaluate it against your set of criteria. Instead, with the help of a stock screener, you can set your filters, and the rest is taken care of. You receive a list of stocks that meet your requirements. Then you can go from there to decide where to buy shares.

Getting Ideas from a Stock Screener

When getting an idea from a stock screener, it’s important to remember that — in many cases — you will be getting ideas based on the things that are important to you. You might want to find companies with a certain P/E ratio, or use some other factor.

Some stock screeners don’t have you input information first. Instead, they offer ways to choose based on different characteristics. Maybe you want a list of all of today’s winning stocks? Are you interested in foreign funds?

There are sites that offer you access to different types of investing. You can see a list of stocks that fit the descriptions you gave. Plus, many stock screeners also include the option to get mutual fund results, along with ETFs.

Another good way to get ideas from a tool like the Safety Score we use. It’s one way to find stock ideas quickly and easily.

Using the Safety Score

The Safety Score allows you to quickly see where something stands. You can do this on your desktop, or by using your mobile device.

When you log into Stocks for the Week, you’ll see today’s investment recommendations, along with their Saftey Scores.

This can be one way to find ideas — look at recommendations from other resources. The Safety Score looks at fundamental information to help you make trades.

But you don’t have to start at the front page. If you click on the sectors, you can see that there are different areas of the stock screener. The closer to 100, the safer the stock is supposed to be.

Consider starting with a sector. Look for a sector that has a higher overall score. Once you choose the sector, you can look at the industries that fall into the sector. This is where you begin to see stock ideas. You’ll see the Safety Score, as well as get a look into how the candy is made.

Stock Screeners Aren’t Everything

Stock screeners can be great if you are looking for ideas. If you’re not sure what you want to buy, but you feel like you have to get something, listen to your gut. Just because a stock screener indicates that you might want that stock, it’s important to do your due diligence.

Screeners can only make recommendations based on criteria selected by humans. On top of that, a screener isn’t going to catch an issue with a member of the board stepping down and suddenly making the entire company undesirable.

It’s important to understand that stock screeners are about helping you succeed — at least they should be.

You need to look at a stock screener as an idea factory. Put in what you have and then include what you want the ideal investment to be. Once you do that, you’ll get a list of companies that match. However, you also need to pay attention to the following items:

  • What’s already in your portfolio? You want to keep it diverse.
  • What’s your time frame? If something is a bit volatile today or has a P/E ratio out of the range you prefer, you might have time to make a different decision.
  • Do you have the risk tolerance for the stock?

Don’t just expect the stock screener to do all the heavy lifting. You still need to research the companies that seem most interesting to you and make your move based on that information. The stock screener should just be the first thing to help you get ideas that you might miss otherwise.

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Written by Miranda Marquit

Miranda is a financial journalist. She specializes in writing about beginning investing, long-term financial planning, and how to get your money to work for you -- allowing you to enjoy your preferred lifestyle.

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