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Discover how you can unlock the power of a stock screener!
In this article, you'll discover how a stock screener can save you time and enhance your investment returns by quickly filtering through thousands of stocks to find those that meet your criteria.
Learn about the key benefits, how often to use them, and tips on setting up your own screens. This guide also highlights the Quant Investing stock screener, built by investors for investors, with over 110 ratios and indicators.
By the end, you’ll know how to leverage stock screeners to boost your investment returns.
Benefits of using a stock screener when investing in stocks
When I started investing in 1987 there were no stock screeners. Personal computers were just getting started and couldn’t do much. Do you remember Lotus 123?
I got all my investment ideas – mainly low PE and high dividend yield companies – searching through the stock tables of newspapers and financial magazines.
Ah… the good old days you may be thinking, right?
Wrong!
It was hard work. After finding a company the financials were not online you had to call the company to mail them to you. Only when you received them could you start doing your analysis to see if the company fit your investment strategy.
I don’t want to go back
Even though I loved every minute of researching and finding great investment ideas I don’t want to go back to doing research like that. I’ll take a modern stock screener any day of the week.
What is a stock screener?
A stock screener is a tool that lets you filter or screen stocks based on specific ratios and indicators. Stock screeners make your live a lot easier than the old days.
You of course still have to do your homework, but you can screen the whole world with a few clicks, easily save screens and create your own watchlists.
This is a huge advantage!
When should you use a stock screener?
At least once a week, that is what I do.
The rest of the time you should do in depth research – this of course depends on your investment strategy.
I’m serious; I use a stock screener about once a week.
You should use a stock screener to build your watchlist. If not how else are you going to sift through the thousands of stocks out there?
Benefits of investing with stock screener software
So why should you use a stock screener?
First and foremost, it saves you time, especially if you invest in smaller companies. Sometimes finding information on these stocks is difficult.
But with a stock screener, you have an advantage because all information is updated as soon as it’s available.
How to take advantage of a stock screener
Once you have access to a screener, you need to know how to screen stocks. You could spend hours or days trying to find out what criteria (ratios and indicators) to look for with the screener and how to combine them.
As you know there are many ratios and indicators you can use… but only a few really matter.
My favourite stock screener
Here is where I am biased, let me tell you why.
After leaving the banking industry in 2012, and losing my access to a Bloomberg terminal, I could not find a stock screener that met my needs in terms of the number of companies, ratios and indicators to invest my own money so I develop a screener and the Quant Investing stock screener was born.
From a small start with just two people we have grown to a team of people. Our goal has however stayed the same, to help you increase your investment returns.
Built by investors for investors
The Quant Investing stock screener is not just a product we sell it’s something we use every day to invest our own money.
It is thus a screener built by investors for investors.
Because we also want to increase our returns we test and write about new strategies and ideas we find all the time.
You can read everything in our blog which is free, simply click on the following link: Quant Investing Blog
If we find an idea or investment strategy that REALLY works (we test most strategies again) we immediately include all the ratios and indicators you need to implement it in the screener.
The best strategies we have tested
You can find a summary of all the best investment strategies we have tested here: Best investment strategies we have tested.
110 ratios and indicators you can use
That is the reason why the screener already has 110 ratios and indicators you can use to find investment ideas. This is important, having so many ratios and indicators you can use means you can find exactly the companies that best fit your investment strategy!
You can find out more about the screener by clicking on the following link: more information about the Quant Investing screener
For example with a stock screener you can:
1. Find high momentum companies
Stock price momentum gives you a lot higher returns!
And if you think it’s something only traders use and is useless to long-term investors (including value investors) then I suggest you give it some serious thought.
Momentum is a great idea
I never looked at momentum (also called Price Index) but after testing 168 investment strategies over 12 years and writing the research paper Quantitative Value Investing in Europe: What works for achieving alpha , I become a BIG supporter of using positive stock price momentum as one of the ratios I use when looking for investment ideas.
All the testing proved that the basic idea behind momentum is true. Once the stock price goes up or down (numerous research studies over up to 100 years have shown) that it continues to move in that direction.
What is momentum and how is it calculated?
Stock price momentum is simply the movement of the stock price over a certain period.
For example in the Quant Investing stock screener we calculate 12 months momentum or Price Index (PI) 12m as (current share price / share price 12 months ago).
This allows you to easily and quickly sort companies by share price momentum, the higher the better.
The screener has momentum (or price index) available on all companies from 1 month up to 60 months for you to use.
Read more about momentum here
You can find more information about momentum including just how well it works here:
Stock price momentum back test
10 myths about momentum investing, squashed
2. Find better quality companies
The Piotroski F-Score was developed by Professor Joseph D. Piotroski in his search for a ranking system that can increase the returns of a low price to book investment strategy.
I am not going to show you how the Piotroski F-Score is calculated in this article - you can read all about that over here: This academic can help you make better investment decisions – Piotroski F-Score
Does it the Piotroski F-Score work?
When Prof Piotroski tested the F-Score over the 20 year period from 1976 to 1996 it exceeded his most optimistic expectations.
By buying only companies that scored the best (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average yearly outperformance over the market of 13.4%.
Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).
Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23.0% better than the market.
You need a stock screener to find good F-Score companies
The Piotroski F-Score is not hard to calculate, you simply have to calculate 9 financial statement ratios and add them all together. You just need a bit of time.
But how about trying to do it for more than 22,000 companies?
That is where the Quant Investing stock screener helps you. We update the Piotroski F-Score for the over 22,000 companies in the screener on a daily basis. All you have to so is select high F-Score indicator to get a list of the best companies – no calculations needed.
Read more about the Piotroski F-Score here
You can find more information about the F-Score here:
This academic can help you make better investment decisions – Piotroski F-Score
Can the Piotroski F-Score also improve your investment strategy?
3 key features of a good stock screener
Before I started building the Quant Investing stock screener I tried almost every stock screener I could find. As I said did not find one that met all my needs so I built the Quant Investing stock screener.
What I found here is a list of key features you should look for in stock screener software.
Best investment strategy scan
Most of my best investments have come from a few investment strategies.
Some stock screeners out there have pre-saved screens based on the best (time tested) investment strategies. That’s the case with the Quant Investing stock screener, which I’ll tell you more about in a minute.
Finding the best strategies is a LOT of work
I want you to become a great investor you have to use one of the best investment strategies. To find these strategies you have a mountain of work to do.
A clever shortcut is to learn from other great investors and researchers that have already found and tested great investment strategies.
And with a great strategy I don’t just mean the strategy that worked great the last few years – I mean strategies that have performed great over long (10 to 20 years) periods of time in up and down markets.
That is where the Quant Investing stock screener saves you a lot of work and time as we have already saved the best 16 investment strategies we could find for you.
You can immediately start using them with a few simple mouse clicks.
Here are a few examples:
Quality Value Momentum
The Quality Value Momentum investment strategy is made up from the best ideas from our research over the past 10 years. We tested results of the investment strategy over 13 years and it returned +1142%
Value Momentum stocks
This Value Momentum investment strategy uses the best valuation indicator along with stock price momentum to make sure you buy undervalued companies with an upward moving stock price.
Free Cash Flow Momentum
The Free Cash Flow Momentum investment strategy finds undervalued companies with a high free cash flow yield and an upward moving stock price.
Magic Formula screen
The Magic Formula investment strategy was developed by Joel Greenblatt and described in his excellent book called The Little Book that Still Beats the Market. It is also the book that got me started with quantitative investing in 2006. The Magic Formula helps you find good quality companies that are trading at an attractive price.
What’s my favourite online stock screener?
Hands down, without a doubt…
My favourite stock screener for serious investors it the Quant Investing stock screener. I use this stock screener as it has all the markets, ratios and indicators I need.
I could go on and on about why you should sign up, but it would take a long time and this article is too long already.
Instead, I will let you use it and convince yourself.
We have a Free Demo version of the screener and if you subscribe we have a 30 day full refund period. This gives you enough time to try all the features and decide if the stock screener is right for you.
If it’s not, just send us an email asking for a refund, it’s as simple as that.
To sign up click here Quant Investing stock screener sign-up page
The bottom line
If you want to seriously invest in stocks, a stock screener is one of the most important tools you can use. It will help you sort through thousands of stocks to find only those that match specific criteria and your investment strategy.
Hopefully, now you have a better idea how to use a stock screener - and a clear understanding of why they are not all created equal.
When you are ready, sign up for the Quant Investing stock screener. In the meantime, keep studying.
PS It’s so easy to put things off and forget why not sign up right now to test if it’s the right tool for you.
