Stock screeners

Nilus Mattive discusses how to use stock screeners and how they can benefit investors. Mr. Mattive explains the fundamental items to look for when screening stocks.

Stock screeners are filtering programs that draw on databases of stored information, allowing investors to search for investments based on pre-determined criteria. In the past, it took a proprietary system and either lots of tedious labor or a very powerful computer to perform a single stock screen. Today, investment professionals still have access to programs and software that give them more information than most but the Internet has brought screening to the masses and many of the online tools are as powerful as some of the professional level programs. In fact, many websites offer advanced tools and rich data sources absolutely free of charge and some brokers offer their own proprietary screening tools.

After finding the screening program, investors must define criteria. Some sites have pre-determined searches to help start the process. But, in Mattive's experience, the most interesting and relevant results are produced when the investor selects the criteria himself.

Some basic fundamental items to look for:

-    There may be no more important key to successful investing than buying at the right price. And there's no simpler measure than the price-to-earnings (P/E) ratio. The lower the number, the less money investors pay for every penny the company earns.

-    Free cash flow, which is the amount of money a company has after it pays all its normal costs of doing business, is a good indicator.

-    Investors can use a company's debt-to-equity ratio to determine how much long-term debt it has. The higher the percentage, the more debt the company has.

-    A solid profit margin tells how much of a company's revenue becomes profit. It's expressed in percentage terms and the bigger the number, the better.

If an investor is after higher-growth companies, he could include other criteria, such as screening for firms that have posted five straight years of double-digit sales gains or that have doubled their profits in the last year.

"Is it a perfect system that picks the ultimate investments Of course not. But it's a great way to get some interesting names that have lot of things in their favor. A thorough investigation should always be done before making an investment decision. Investors can find investments that have strong momentum by specifying share prices that are at, or near, new highs. Or, looking to see what companies have confident managers, screen for large amounts of insider buying. The possibilities are endless, the searches cost nothing and the resulting information can prove very profitable," Mattive states.

To read this issue online, please visit:

http://www.moneyandmarkets.com/Issues.aspxA-Stock-Screen-for-Growth-Value-and-Dividends-1784

About NILUS MATTIVE & MONEY AND MARKETS     

    Nilus Mattive, a financial analyst at Weiss Research, is the editor of Dividend Superstars, a monthly publication and is also the editor of the company's daily e-letter, Money and Markets. Formerly a senior editor of Standard & Poor's The Outlook, the oldest continuously published investment newsletter in the country, he has written for a number of investment websites, including BusinessWeek and Individual Investor. Mr. Mattive is the author of The Standard & Poor's Guide for the New Investor (McGraw-Hill, 2004) and has appeared on the popular investment radio show, Traders Nation, to discuss his views on personal finance.

Mr. Mattive graduated cum laude from the University of Scranton.

Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.




Stock screeners



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