How Useful Are Stock Screening Tools?
James Woolley
April 28, 2009
Stock screening tools basically allow you to filter through thousands of stocks to find those that satisfy your own chosen criteria. They can literally save you hours of time because if they didn't exist, then you would have to look through each company individually before finding any suitable investment opportunities.
You will generally find lots of stock screening software on the internet. Most of them are available either through your online stock broker or through websites which specialise in providing financial data. Some are better than others, but the best ones will allow you to choose from a huge range of different fundamental and technical criteria.
Fundamental criteria will often include crucial data such as net profits, earnings, price/earnings ratios, price/earnings growth ratios, dividends, dividend yields, market cap, net gearing and return on capital employed, to name just a few. Furthermore these screening tools will often include analyst forecasts of these figures for the next couple of years so you can broadly predict how a company is going to perform, and therefore how much value there is in the current share price.
Technical criteria, meanwhile, are generally used by short-term traders and options traders because they alert you to any stocks whose price is displaying the most common technical patterns. For example they may display stocks whose moving averages are crossing upwards or downwards, or they may display stocks making new 52 week highs or lows, or stocks that are currently overbought or oversold based on several leading indicators. They may also alert you to stocks breaking out of an established trading range which I personally think is one of the most meaningful technical patterns.
Once you enter your criteria, whether it's based on fundamental or technical analysis, you can instantly access a list of companies that could be potentially good investments. If this list is still too large, you can simply add additional criteria until your list is a more manageable size. You can then scrutinize each of these companies in more detail by looking at their financial accounts and their price charts, and reading their latest annual reports and trading statements to see if they are indeed worth investing in.
So overall these stock screening tools really are invaluable and will save you hours of time, whilst also identifying some of the very best investment and trading opportunities.
Click here to find out more about stocks and options trading and to read a full review of Zecco.
You will generally find lots of stock screening software on the internet. Most of them are available either through your online stock broker or through websites which specialise in providing financial data. Some are better than others, but the best ones will allow you to choose from a huge range of different fundamental and technical criteria.
Fundamental criteria will often include crucial data such as net profits, earnings, price/earnings ratios, price/earnings growth ratios, dividends, dividend yields, market cap, net gearing and return on capital employed, to name just a few. Furthermore these screening tools will often include analyst forecasts of these figures for the next couple of years so you can broadly predict how a company is going to perform, and therefore how much value there is in the current share price.
Technical criteria, meanwhile, are generally used by short-term traders and options traders because they alert you to any stocks whose price is displaying the most common technical patterns. For example they may display stocks whose moving averages are crossing upwards or downwards, or they may display stocks making new 52 week highs or lows, or stocks that are currently overbought or oversold based on several leading indicators. They may also alert you to stocks breaking out of an established trading range which I personally think is one of the most meaningful technical patterns.
Once you enter your criteria, whether it's based on fundamental or technical analysis, you can instantly access a list of companies that could be potentially good investments. If this list is still too large, you can simply add additional criteria until your list is a more manageable size. You can then scrutinize each of these companies in more detail by looking at their financial accounts and their price charts, and reading their latest annual reports and trading statements to see if they are indeed worth investing in.
So overall these stock screening tools really are invaluable and will save you hours of time, whilst also identifying some of the very best investment and trading opportunities.
Click here to find out more about stocks and options trading and to read a full review of Zecco.