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What is a stock screener?
A screener is a program that allows you to filter stocks by providing a list of criteria that is only relevant to the stocks you wish to view.
A really simple example of this would be to enter a criteria for stocks only below £50 in value. If you entered Price <£50, it would only bring up the stocks that are currently priced at less than £50.
This is incredibly useful for a prospective trader, because there are a multiple of different ways to invest in stocks - and depending on your method of investment, stocks behaving in a particular way are more attractive to invest in.
For example: If you were looking for stocks to hold long-term and take dividends from, you may want to only include stocks that have a dividend yield of over 5%.
The three I have personally used is Finbox, Finviz and Tradingview. I have no personal ties to any of them and you will have different experiences depending on what you are looking to use them for, but here is my honest review of them:
Finviz - best in class for US stocks only. Elite subscription recommended which isnt cheap, but it has the best available filters and is presented in a user-friendly set-up. Only downside is its availability for stocks in foreign markets and it doesn't list commodities like Gold etc.
Finbox - best available filters for a screener. There isn't much you can't filter on Finbox, again on a subscription service. The massive range of available filters means you can really drill down to a couple of stocks that fit exactly what you're looking to invest in. I find that once i've then found those stocks I then have to move onto one of the other programs for chart viewing and trading analysis which means it's not a program I recommend for frequent traders.
Tradingview - best in class for foreign markets and usability. While the screener may not have as many customisable filters as Finbox, the sheer usability and user-friendly setup means that this is my go to screener 9 times out of 10 now. Plus, you get most of the functionality you need for a trader for free! It looks the best, is very customisable and still has a wealth of detail. This is my go-to screener for trading, and only sometimes do I refer to the others for confirmation when im looking at long investments.
What setups do we use on our screeners?
Day Trading:
Price: £10-100. This means that the company is established but doesn't have a particuarly high price tag. This is important because we can purchase more of the stock, meaning that small price rises or falls are more profitable.
Volume (30d av) > 1 million: This means that the stock is reguarly traded and is therefore classed as 'liquid'. This means that traders can buy and sell the stock faster, which is better for day trading.
Relative Volume > 2x: This means that the stock is currently trading at much higher volumes than it's usual average. This is important for day trading because a volitile stock tends to move both up in value and down in value quickly as investors buy and sell, and a good trader can capitilise on those moves either way.
Potential Longs:
EV/EBITDA < 10: This is a comparison between the value of a company compared to how much they earn. If a company had a lot of stocks trading at a high price, they would have a higher EV, and therefore a higher EV/EBITDA - EBITDA being a measure of earnings. This could therefore indicate an overpriced stock, or a bad investment.
PEG < 1: This is slight tweek on EV/EBITDA by comparing the stocks price against their earnings and growth. Again a high number would hint towards an overpriced stock, although its worth mentioning that industries tend to have different trending levels of PEG and EV/EBITDA so it's worth comparing against other stocks in the same industry.
Market Cap > 10bn: This is the total value of the company. The reason I go big on this category is because a huge company like Apple is much less likely to go bust and it's therefore a measure of protecting my investment.
Potential Shorts:
EV/EBITDA > 25.
PEG > 5.
Net Debt/EBITDA >3: This is a companies net debt measured against their earnings. A company with a lot of debt and a small earnings pot would score high in this ratio and would indicate that the companies ability to pay back it's debt is less, and the company could be struggling.
I hope you can see the benefits of a stock screener and how it can be differently set up depending on the type of investment you are looking to complete.
If you have any further questions on our screeners or want to suggest some of your own why not use our Forum and see how other members are using screeners?
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