When it comes to searching for individual stocks, we’d recommend using Finviz’s online screening tool. It’s free and powerful, allowing you to filter things based on lots of different criteria.

And what criteria should you be screening for in the first place? Well, it depends on what kind of stocks you’re after. If you’re looking for, say, large-cap technology stocks, then you’d apply those criteria under the Market Cap and Sector filters as shown below.

The resulting screen contains 115 results, which you can winnow down based on other metrics. Here, for example, we’ve sorted those results according to dividend yield. We can thus see at a glance which large-cap technology stocks offer the greatest income potential – and we could then, perhaps, delve deeper into the top 10. 💡

You can also use the screening tool to find specific kinds of stocks; “value” or “growth” stocks, for example. One way to find value stocks might be to select “low (<15)” under the “Forward P/E” filter. And if you were interested in growth stocks, you could select “over 20%” under the “EPS growth next 5 years” filter.

Finding buried treasure in your stock screen

And if you’re not fussy about the style of stock, but just want to screen for some attractive-looking gems worthy of further investigation? Then it may be worthwhile filtering at the intersection of “quality” and value – in other words, robust companies with relatively cheap stock prices. Here’s an example of a screen we’ve run that attempts to do this. In order to exclude idiosyncratic smaller stocks, our first criteria is market cap >$2 billion. Then, to capture cheapness, we select “low (<15)” under “Forward P/E.” Finally, for quality, we select high (>20%) net profit margin, over 15% return on equity, and under 0.5 long-term debt/equity.

The result? A manageable list of around 20 stocks that are a decent size, relatively cheap, generate attractive returns, and have reasonable debt loads.

This isn’t an exact science – it’s just one interpretation of what constitutes high-quality and cheap. Another, made famous by legendary investor Joel Greenblatt in The Little Book that Beats the Market, is “Magic Formula Investing.”

Magic Formula Investing is an investment strategy that begins by screening for inexpensive, dependable companies with a high earnings yield (operating profit divided by enterprise value) and a high return on invested capital (operating profit divided by (net fixed assets + working capital)). You then invest equal amounts in the top 30 stocks based on these criteria, rescreening and rebalancing once a year. This strategy, which starts off with a simple stock screen, has – according to Greenblatt – consistently beaten the market. ⚡

As well as searching for value and quality, you can also add some technical analysis criteria to a screen. Some examples (shown below on Finviz) include seeing whether a stock’s price is above its 50-day simple moving average (SMA), whether its 20-day SMA is above its 50-day SMA, or quite simply whether the stock price is up over the past year. These criteria are more or less trying to capture the same thing: stocks with prices on an upward trend.

Regardless of how you conduct your screen and what criteria you use, it’s important to always do more in-depth fundamental research into the investments they throw up. Think of stock screening as a search engine you use to draw up a preliminary shortlist of shopping ideas; you’re always going to do your homework on the individual products before you buy. ✅

And that’s it. You now have a pretty good grounding in how to go about screening for ETFs and stocks based on your preferred investment criteria, as well as a few initial ideas. Get out there and put what you’ve just learned into practice – you might just find your next best investment idea through running some screens! 🚀