Stock Screener

A stock screener filters stocks on the basis of parameters given by investors. Before the advent of stock screeners, investors had to single out good investment options from a universe of underperforming stocks everyday by performing systematic analytical calculations. With access to a stock screener, however, complex statistical comparisons of stocks against multiple criteria can be carried out with a few clicks of a mouse.

Investing with Stock Screeners

An average stock screener has a collection of company stocks, predefined variables to screen them and a search engine. The search engine scans the list of stocks on the basis of variables selected by an investor and displays stocks that match the criteria. For example, if the parameters given by an investor for stock screening are ‘listed on NYSE,’ ‘profit to earnings (P/E) ratio between 14-20’ and ‘in technology sector,’ the stock screener will scan all the stocks in its database and display technology stocks that are listed on the NYSE and having a P/E ratio of 14-20. Such screening simplifies stock investing and reduces the margin of error.

Fundamental and Technical Stock Screeners

Stock screeners usually use fundamental or technical criteria to screen the market. Technical criteria consist of high level mathematical or statistical calculations, whereas fundamental criteria consider basic factors, such as the type of financial instrument and type of issuing industry. Such real time, criteria-specific screening is available both at the middle and end of the day. These easy-to-use fundamental screeners are freely available in the market. Some of them are:

• The AOL Money screener: A basic version of the stock screener that has predefined criteria for screening.
• MSN Money stock screener: This screener performs ten predetermined searches on the basis of basic technical and fundamental criteria.
• Morningstar: This screener checks the stocks and ranks them on the basis of preset analysis data specified by Morningstar.
• The Dow Jones Market Watch stock screener: This is an evolved version that has both fundamental and technical sections for stock screening.

Stock screeners simplify investing, but have limitations. These screeners cannot screen stocks on the basis of qualitative parameters or industry specific criteria. Ultimately, screening can only give you a focused group of stocks to consider. It is not a substitute to the knowledge of investing gained through experience.