I use stock screeners every day.
I cannot imagine investing in stocks without the assistance of a
There are over 10,000 stocks out there and you need a quick and
reliable way to sort through them all.
It's not enough to type familiar ticker symbols into a website and
do a spot check on whatever items happen to be displayed.
For one, most people's universe of familiar stocks is relatively
small. And that alone will limit one's investment opportunities.
And two, even if your universe of familiar stocks is larger than
most, nobody's is big enough to stay abreast of them all.
Nor would you want to. Many stocks should not even be considered as
investments. So you don't want to clutter your mind with those
But many others are worthy of consideration, and you need a way to
get those onto your radar screen.
This is important. Many investors are not seeing the kinds of
returns they want in their portfolios because their universe of
familiar stocks is limited.
What's interesting is that some of your best performing stocks
right now were likely new to you at some point.
But there are plenty of others that could also be top performers
for you if you only knew about them.
And the best way to discover new, potentially profitable stocks is
to regularly scan for the best opportunities.
Some people avoid screeners because they think it's complicated, or
they don't think they know enough about stocks to look for the
But you don't have to be an analyst to benefit from a screener.
For example, if you're interested in finding some new stocks for
your portfolio, just ask yourself some simple questions.
Do I want stocks that will see both sales growth and earnings
growth next year?
If so, plug those into the screener.
Now, only those with your desired growth rates will appear on your
list. And those with negative sales growth or negative earnings
growth will NOT be on that list, so you don't have to waste your
time on them.
Would you prefer your stocks to have low debt levels or high
(If you're thinking about traits you'd like your stocks to have,
I'm assuming you said low debt levels.) And if that's the case,
plug that into your screener as well.
Now, only stocks with your desired growth rates AND low debt will
Would you want your stock to post a positive surprise or
If you're bullish, you probably said positive surprise.
There's no foolproof way to perfectly predict which stocks will
positively surprise in the future. However, studies have shown that
stocks that have surprised in the past have a tendency to surprise
again in the future. So by screening for stocks that have recently
posted positive surprises, you are increasing your chances that
those stocks will positively surprise for you.
Just go down your wish list of characteristics you'd like your
stocks to have.
Your criteria do not have to be fancy, and your screens do not have
to be complex. Much of it is common sense. And the screener will
help you sift through all of the garbage so you can spend your time
on only those worth considering.
A good screener can also inspire you and introduce you to new ways
to pick good stocks.
In the Research Wizard (the screener that I use daily), there are
hundreds of different screening items to pick and choose from. (I
can even create my own.)
And they are all organized in easy to understand categories like
Growth, Valuations, Margins, etc.
But in addition to the most common and most popular screening
items, there are other lesser known items available, but no less
A great example is the R-Squared Growth Rate item. I had seen that
item in the screener over and over again. One day I decided to test
it. I read the definition that came with it and decided to give it
Long story short, I was amazed at its predictability. And I ended
up creating a screen with that little known item. And I was so glad
I did. Because that screen was actually UP in the bear market of
2008 while the market plunged nearly -40%!
They say when you play a sport with someone better than you, it
raises your game. Or when you work with a talented person, you
perform better. The same is true with the tools that you use.
By seeing what a tool is capable of, it allows you to think about
what you could be capable of.
I never would have 'discovered' the R-Squared Growth Rate item (not
to mention countless others) if those items hadn't been staring at
me and made available in a tool that allowed me to test them.
A good stock screener can inspire you and help you pick better
stocks on a consistent basis. And as traders and investors, that's
what we all want.
Today's screen focuses on some of my current wish list items:
Top 50% of Zacks Ranked Industries
(The top half of Zacks Ranked Industries has outperformed the
bottom half by a factor of more than 2 to 1.)
Zacks Rank equal to 1
(Over the last 26 years, the Zacks #1 Rank (Strong Buy) stocks
have shown an average annual return of 26% a year.)
Positive Projected Sales and EPS Growth
(Simply put, I want my stocks to be growing on both the top and
Positive Sales and EPS Surprises
(As mentioned earlier, stocks that have surprised in the past
have a tendency to surprise again in the future. This increases
our chances of getting into stocks that will positively surprise
(If margins are going up, that means management has a good grip
on costs, which allows more of each sale to be counted as
Price to Sales Ratio less than or equal to 1
(In my testing I have found that stocks with a Price to Sales
(P/S) ratio of less than 1, significantly outperforms stocks with
a P/S ratio higher than that. (Over 4 demonstrated the worst
Here are 5 stocks that made it through the screen this week:
CNO Financial Group
Old Republic Int'l
All of these stocks meet every single one of my current wish list
items, which means you can focus your time on only the top
A good screener can help you save time, discover new stocks,
consistently find winners and inspire you to become a better
Be sure to get the rest of the stocks on this list. And make sure
you sign up for a free trial to our powerful, yet easy to use,
screening and backtesting program for your own stock picking
Click here to sign up for a free trial to the
Research Wizard today.
Disclosure: Officers, directors and/or employees of Zacks
Investment Research may own or have sold short securities and/or
hold long and/or short positions in options that are mentioned in
this material. An affiliated investment advisory firm may own or
have sold short securities and/or hold long and/or short positions
in options that are mentioned in this material.
Disclosure: Performance information for Zacks' portfolios and
strategies are available at:
CNO FINL GRP (CNO): Free Stock Analysis Report
COMFORT SYSTEMS (FIX): Free Stock Analysis
KIRKLANDS INC (KIRK): Free Stock Analysis
OLD REP INTL (ORI): Free Stock Analysis Report
SEALED AIR CORP (SEE): Free Stock Analysis
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