The Best Free Stock Screener
These days, my most precious commodity isn’t oil, gold, or even money. It’s time. I just don’t have any.
With all of the deadlines I have to meet, trading services I have to run, speeches I have to prepare, soccer teams I have to coach, catches in the driveway that need to be had and quality time that needs to be spent with my wife, there’s very little “me” time.
I’m not complaining. I love being busy. And I’d rather it be this way than have nothing to do but watch Maury reruns to see if the guy really is the baby daddy (it’s always more entertaining when he’s not).
Because of all of the deadlines and obligations, I’m always searching for ways to save time. A new route to the kids’ school to save five minutes? Just tell me where to go. If a flight will get me to my destination 20 minutes sooner than another one, I’ll be on the earlier plane. And if I can use a tool to take hours off of my research when analyzing stocks, you can be sure I’ll use it.
If you have an idea of what you’re looking for in a stock, a stock screener will save you loads of time.
For example, you may only want to consider stocks trading below a 17 price-to-earnings ratio, with low debt and a dividend yield of 2%. By plugging those factors into a stock screener, it would save a tremendous amount of time over first finding all of the stocks with a sub 17 P/E, then seeing if any have the right yield, then investigating the balance sheets to determine if their debt is low enough.
Fortunately, there are lots of screeners out there for you, and many of them are free.
First, let’s talk about one that’s not worth your time - Yahoo! Finance.
Let me start by saying that I LOVE Yahoo! Finance. The wealth of free information available on Yahoo! Finance is astounding. It’s the first site I check every morning for general market news and to look up information on my stocks. I use it all day long.
However, their screener is very rudimentary. Too simple for anyone trying to conduct even basic analysis.
My favorite screener is the free one offered by Bing, which used to be MSN. Along with some pre-programmed screens for you to use such as value stocks, contrarian stocks, etc., you can also select from a decent number of variables.
For example, if I want to find stocks with a market cap of at least $1 billion, with earnings growth of between 10% and 30%, with a quick ratio of greater than 1, and trading below book value, I can plug those variables in and it generates a list of 13 stocks including Lukoil (OTC: LUKOY.PK) and Sprint Nextel (NYSE: S). From there I can conduct my own analysis and see if these are companies that would make a suitable investment.
Morningstar has a decent free screener as well, and an even better one if you pay for it.
Most online stockbrokers have screens, though they are often based on technical indicators rather than fundamentals. But many are constantly improving their offerings and, for technically oriented traders, there are some pretty good screeners offered by the brokers.
I haven’t seen many free screeners that combine fundamental analysis and technical analysis. In my opinion, that’s the best way to find stocks. By ensuring that you’re investing in quality businesses and then narrowing the timing of your entry with technical analysis, you stand a much better chance of success. You can have a great company, but if the stock isn’t getting ready to move, there’s no reason to own it now.
Even the screeners that charge a fee often don’t combine the two methodologies.
The free screeners lack one important element: backtesting. That’s the ability to go back in time and test your screen according to what really happened in the market and in the stocks selected by the screener. Some brokerages offer software that allows you to test your strategies out.
In an upcoming column, I will discuss how to use those backtesting systems to improve your results.
In the meantime, I encourage you to play with the various screeners you can find online and with your broker, and see how much time it will shave off of your stock selection process.
P.S. If you like the idea of using a system on which to base stock trading decisions but don’t have the time to develop one yourself, I encourage you to take a look at my Oxford Systems Trader. Over the past decade, when the system was backtested, it outperformed the market by 1,568%. And since it’s gone live, it’s doing great in the real world, too.
Last week, we took 24% gains in Cardtronics (Nasdaq: CATM) and we’ve had three triple-digit winners so far. And on Monday, I recommended an energy play that is ridiculously cheap, yet growing book value and efficiency at a rapid clip.
For more info, click here.