Video Lesson
Prefer watching? This video covers the key concepts from this article.
What Is Stock Screening?
There are over 5,000 publicly traded stocks on US exchanges alone. No investor can evaluate all of them. Stock screening solves this by letting you apply filters to instantly narrow the universe to only stocks meeting your criteria. In minutes, you go from thousands of options to a focused list of 20–30 candidates worth researching. Free screeners: Finviz, Yahoo Finance, TradingView, Morningstar.
Core Screener Filters: Value Investing
- P/E ratio: below 15 for deep value; below market average for relative value
- Price-to-Book (P/B): below 1.5 for asset-heavy industries
- Debt-to-Equity: below 1.0 screens out over-leveraged companies
- Return on Equity (ROE): above 15% ensures strong returns on capital
Core Screener Filters: Growth Investing
- Revenue growth: 20%+ year-over-year for the past three years
- Earnings growth: 15–20%+ consistently exceeding analyst estimates
- Gross margin: above 40% signals pricing power and scalability
Combining Screens: The Quality Factor
The most effective screens combine multiple factors. Quality investors look for high returns on capital, low debt, consistent earnings growth, and reasonable valuations all simultaneously. This GARP approach — Growth at a Reasonable Price — avoids both expensive glamour stocks and cheap value traps.
From Screener to Watchlist: Next Steps
A screener gives you candidates, not buy signals. Do a quick 10-minute check on each result: is revenue actually growing? Is margin trend positive? Is debt manageable? Move the best 5–10 into a watchlist and follow them over time. Watching a stock before buying — seeing how management communicates and how the business performs quarter to quarter — is one of the highest-return uses of research time.