What’s the best way for to find investment ideas?
This article is a guest post by Zack Miller (who writes the New Rules of Investing blog) helps you do exactly that.
It is about stock screeners which, for those perhaps not familiar with the term, are programs or web pages that lets you search for companies whose stock prices fit certain criteria.
For example, a price to earnings ratio of less than 10 and debt to equity of less than 35%. The screener will then give you a list of companies that fit within the search criteria you specified.
Screeners are really helpful tools (the best way to get investment ideas) but they are just that, tools. They also make mistakes, which means they are just a starting point in your search for good investment ideas.
I use screeners extensively to find investment ideas. But as mentioned it is just a start, from there I do an in depth analysis of the companies identified in the screen.
The screeners Zack mentions are really useful for the do-it-yourself investor and are great resources for finding investment ideas to research further.
The Web’s Best Stock Screens: Looking for the next winning investment
Stock screens allow investors to sort through lots of different stocks in search for only the ones that fit certain criteria. Investors looking for the next stock pick for their portfolios can use basic screening tools, available at both Yahoo! Finance and Google Finance.
MSN recently retired its highly-regarded stock screening tools, leaving what’s freely available somewhat lacking.
Screening 2.0, something I like to discuss on the site, provides the same outcomes but incorporates more algorithmic know-how, some artificial intelligence (how do you deal with an infinite P/E one year?), better ability to backtest results, and preset criteria to match results of the world’s best investors.
I decided to piece together a list of some of the Internet’s best free and premium stock screening resources.
So, here goes:
- Validea: One of my favorites and started by author of The Guru Investor, John Reese. Validea is a premium service that tracks screens preconfigured with the investing criteria of history’s greatest investors, like Buffett, Graham, Peter Lynch, Ken Fisher, and more.
- Finviz: Lots of stuff going on here. IMO, the most powerful, free screener available. With fewer preset screens, Finviz is for more advanced investors who have specific criteria they look for in stocks. A whole lotta descriptive, fundamental, and technical ways to sort for new ideas.
- Manual of Ideas: Mentioned in my post from last week, Top 6 Ideas for Piggyback Investing, MOI has both free and premium screens like 10?45 Bargain Hunter, European Value Report, Equities and Tobin’s Q. These screens come in form of subscription newsletters (again, some free, some premium) with more analysis included beyond the output of the stock screens.
- AAII Screens: Blown away by how many screens the American Association of Individual Investors has on its website (you have to join AAII to access these screens). You can find growth and value screens with preset parameters (like IBD Stable 70 and CAN SLIM) as well as guru screens that look for specific investment criteria established by famed investors like Graham, Buffett, Dreman, Lynch, Zweig, etc.
- Zacks: Nice combination of some free screens (Earnings & Margins, Growth and Income) and premium screens (Zacks Rank 1)
- CNBC: lets users save custom made screens and also has a few prepackaged screens for free
- The Kirk Report: Couldn?t be remiss in mentioning the great screens Kirk puts together for subscribers to his service. He calls his screens, the Stock Screen Machine.
- The Motley Fool’s CAPS: Nifty free screener that incorporates the community’s CAPS ratings into the screens. Allows users to download results to spreadsheets.
- Old School Value: Nice site with numerous free screeners for all kinds of value investing
- MagicFormulaInvesting: Built by the man, himself ? Joel Greenblatt, this is a nice free site to do basic screening for stocks that fit the criteria of the Magic Formula
- AlphaClone: Of course, this hedge fund slicer-and-dicer is a stock screen of sorts. This premium product (read my review here) allows users to identify the top performing funds, peer into their holdings and backtest their strategies.
Insider Buying/ Selling
- GuruFocus: Interesting free and premium offerings that track top guru buys as well as insider transactions. Can download results into spreadsheets for more analysis.
- StockFetcher: Nice premium screen for technical investors encompassing Bollingers, Candlesticks, Moving Averages, and more. Output is downloadable to Excel.
As mentioned in this article Most underrated investor resource on the internet, I really like the Financial Times stock screener as it has more international coverage and is also really easy to use. And best of all its available for free you just have to register (also free) on the Financial Times website.
Happy idea hunting
PS Screeners are great tools you can use to find investment ideas. However, should you not have the time to screen and research investment ideas, take a look at my subscription service.
All the research is done for you all you have to do is read, decide and follow the clear buy or sell instructions. Get more information here