Top Stock Screeners (Do They Save Time and Make Money?)

Stocks screeners help investors learn how to find the best stocks for investing.

Digital Stock Trading
Woman Using Online Stock Market Tools. MixAll Studio

 "Screeners" are tools which display the stocks a user chooses to seek out.  By providing simple parameters (like price per share, earnings, etc...), only shares which "pass" the screen are included in the final results.  Want to see shares trading between $2 and $5?  Set the price per share screen as required, and it will spit out a list of all publicly-traded companies in that price range.

Unfortunately, stock screeners are like a crutch.

 They should only be used as the preliminary first step in anyone's research, NOT as a provider of a final actionable result.  I'll explain the limitations in a minute, but first let's talk about the benefits.

Like most topics we publish, stock screeners are more important with penny stocks than they are with conventional investments.  This is because there are about 18,000 penny stocks, and most of them are low-quality companies which can be easily taken out of the picture by using a simple screen.

Some good stock screeners (although there are dozens) include:

Google Finance 

StockWatch (called "Company Picker", fee-based, ugly site, we use this one the most)

Yahoo! Finance

MarketWatch

You can set numerous parameters to get a more refined result, such as price per share, AND dividend rates, AND Profit Margin, for example.  Some of the more common adjustable parameters include, but are not limited to:

  • which market the shares trade upon
  • current share price
  • industry
  • profit margins
  • financial ratios
  • growth rate
  • dividends
  • trading volume
  • within certain percent of year high / low

Most investors use stock screeners to find potential investments.  We use these online tools to eliminate lack-lustre investments, which is especially important with penny stocks.

If you are interested in finding stocks to buy on your own, you almost certainly will want to start with a stock screener.  In fact, even if you pay a publication for professional stock picks, chances are they started their research in the exact same way.

Remember, performing a stock screen is NOT:

  • doing due diligence
  • effectively researching the underlying companies
  • necessarily generating accurate information

Also, be cautious with pre-set screens.  For example, some popular portals promote their latest "rapid growth" or "low debt" or "high insider ownership" lists.  From my personal experience (decades), these pre-canned screens are more effective for promotion and marketing the underlying publication, than they are about achieving results.  

Of course, it always depends on the parameters of the screen itself, but they very often perform about equal to the market returns, and as such rarely provide an investor with an advantage.  They should be considered a first step to generate potential leads, not as a list of shares to buy.

A stock screen is like driving past a dozen restaurants, then guessing which one has the best tasting food.  You may have a better idea than before the drive, but not necessarily be correct.

 At least you know to avoid the one with garbage out front, broken windows, and a half-lit open sign.

On a personal note, I've never found a screener I like, or which works effectively, reliably, and correctly.  Stock screeners are a necessary tool, and can be very helpful, but do not put full faith into them.  Always use a screener to point you in the right direction, then your own hard work to interrogate your investments and perform due diligence.

Disclosure:  Does my team use stock screeners?  Absolutely.  However, once we've chipped the list of 18,000 potential picks down to hundreds, we actually go through each business methodically, one by one.  

The Most Important Comment:  A computer setting does not shrink the remaining penny stocks down into our short list, but a conversation with a CEO might, just as the underlying company's unique selling proposition, or geographic location, or market share, might.

 You can not use a stock screener for the really important stuff!