Finding the most profitable stocks isn’t an easy job. The market is loaded with tons of alternatives, and only a handful of stocks can deliver you the desired returns and save you from unwanted risks. That’s where Stock Screeners come into play; they perform the task of locating the right stocks from a plethora of options on your behalf.
A stock screener is a powerful trading tool that immediately searches the market data and finds the most suitable stocks for you. It uses customizable filters for basic metrics and technical criteria and displays the best trade possibilities. If you want to know the most powerful stock screeners in the market, you can find them in our Best Stock Screener article.
Now let’s get started with the top methods to use a stock screener and find the best stocks for you.
1. Understand How Stock Screeners Work
The goal of using a stock screener is to narrow your research. An efficient stock screener compiles a list of stocks and filters them according to your preferences. One of the best research providers is Motley Fool, you can find it’s Motley Fool Augmented Reality Review here.
Once you enter your desired traits such as large-cap stocks, a stock screener filters all the available stocks and shows you nothing but large-cap stocks in the results. Similarly, you can further narrow your results by adding more traits and shortlist the most beneficial options for you.
For example, if you want dividend stocks (1) in a price range between $20 to $30 (2), you can set these two details in the criteria section and find the available options.
2. Combine your Investment Goals with Stock Screeners
The best possible way to use stock screeners for your advantage is to combine your investment goals with these potent tools.
In other words, the right stock for you depends very much upon your purpose of investment and your expected results from it. Once you recognize your investment goals, stock screeners can make all the tasks quite easy for you. All you have to do is enter your desired traits and see a curated list of the best stocks for you in the market.
For example, if you are looking for long-term growth potential, you can add growth stocks to your portfolio. Similarly, if you want a secondary source of income, you can go for Income stocks.
3. Understand the Criteria
If you want to make the most out of a stock screener, it is highly recommended that you understand the criteria of stock analysis. A stock screener can help you narrow your list from the huge stock exchange with thousands of stocks to a few recommended stocks. However, to conduct this, you must get familiar with the terms and criteria of research.
Intrinsic Value/Fair Value per Share, Margin of Safety, Greenblatt Earnings Yield, Price to Lynch Fair Value, Price to Graham Number, Piotroski F Score, Altman Z- Score, The Solvency Ratio, PE ratio, are some of the main criteria that you must understand before thinking about investing your hard-earned money into stocks. Once you learn all these terms and how their values affect the future value of the stocks, you can use a stock screener to find the best opportunities for you.
4. Have a Realistic Approach
The last thing to maintain while you are searching for stocks with a stock screener is always keeping in mind that a screener can narrow down your list but not suggest you the best stock to invest in. For example, when you become an expert in selecting the right criteria for your research and finding the right stocks that match your investment goals, the task of investing in the right stocks from the curated list is still up to you.
The best way to earn maximum profits from your trading ventures is to learn the operations of the market and double up your expertise with the help of a powerful screener.