October 12, 2020

Should you use a stock screener? This is a question I get a lot. For the longest time, I was debating if I should put this content in Investing Accelerator or on my YouTube channel. In the end, I’ve decided to share with you for free. Click here to watch it now. This is the first video about stock screeners where I will go through two free stock screeners that I like. I will explain each of the tab within FinVinz so you have a foundational understanding of stock screeners. In the future videos, we will talk about exactly which criteria you should use for stock screeners. 

90% correct transcript

So welcome back to my channel. And this week I actually prepared a seven video training series on stock screeners. So I've seen a lot of interests and requests in terms of how do you screen for stocks? Like you use a stock screener. If you use a stock screener, how do you use it? So I thought, well, I might as well kind of walk you step by step through how I would use a stock screener, even though I don't personally use it in this video, we're going to talk about stock screener, basic and tutorial. So there are two websites that I did a lot of research on and kind of like in terms of the stock screener and other functionality. So I'll, I'll kind of walk through in this video, what to expect, you know, what are the tabs within a stock screener and what you should pay attention to.

And then afterwards, there are six more videos that I dive deeper into stock screener, including comparison between the finviz and the chart mill stock screeners, both of them are free. And I'm also going to walk through how to use a stock screener step-by-step and then I'm also going to talk about some criteria I would suggest you to use if you are a longterm investor, like how to find profitable stocks, how to find discount to stocks, so on and so forth. So that is pretty much the seven video training series that I have prepared for you. So let's get started. So now we have move on to the computer and in this video, our focus is really stock screener, basic and tutorial. So before we start, I just want to celebrate another successful case study within investing accelerator, where Adrian sold one third of his Corning stock options for 120% return.

So he held it for exactly 100 days. So that is fantastic. So his total return for Corning to dates is about 105%. So that is, yeah, that's fantastic. Congratulations, Adrian. Now, if you go to the comments section below, you'll find that I'm actually doing something new in this video and for some of my old videos as well, is that I'm going to do a giveaway in terms of books that I like about investing. I think you should read. So if I get a hundred likes on this video with your supports, that I'll be giving away one book to a person who commented below. So the book this time, it's going to be infinite game by Simon. If you have kind of watched his Ted talk or you have read his book in terms of start with why or leaders eat last, the infinite game is his latest book and I have been reading it.

It's actually quite interesting. So if you want to learn more about business, which will also help with investing, then you can pick this book up or you can comment and like this video, and if you win this book, then you will get it for free. I will basically buy it on Amazon and ship it to your house. Okay. So let's talk about stock screener. So I've done a lot of research, you know, comparing different screeners. And so far I like free screeners the best, and they are two screeners that I especially like one is finviz.com. So here is the logo. So you can just type that in.com. And that's basically the website and there's a screener right here. And then there's also another one called chartmill.com. So these two are both free. There's actually a paid version for these stock screeners as well.

But I don't use it. If you really want to use a paid version, then you can, in this video, I'm going to focus on the user interface of Finviz. So when you go to the website, this is what you're going to see. A lot of things are going, going on and the screener is really at the top here. So if you assume in a little bit, then you're going to see news, screeners, maps, groups, so on and so forth. And screener is what we're going to be focusing on today. So click on that and here is the screener. Now you can imagine that's a screener contain all the possible stocks within the stock exchange. And in this case, it actually covers Amex, NASDAQ and New York stock exchange. And then you can filter them and based on whatever criteria you choose, you can find good companies.

You can find that companies, you can find growing companies, you can find this counter stocks. So it all comes down to the criteria. And in this video, I'm going to walk you through what the difference types of criteria you can choose from and whether you should use it or not just kind of walk you through the user interface. So didn't, I prepare you for the next six videos. So here we go. So first of all, here, you will see that for Finviz. There are actually three major tabs, descriptive, fundamental technical, and below that you'll see a list of all the stocks. So that's great. So this is actually the results at the bottom. And here is where you pick your filtering criteria. So for descriptive is really about the stock itself or to market or to exchange. And in fundamental, this one is about the financials of the company.

So specific financial statement, item, like income statements, balance sheets, so on and so forth. And then there's also technical analysis, which is the study of price. And that's when you look at candlestick patterns, chart patterns, the price volatility, which is how much it fluctuates so on and so forth. So let's start with descriptive now for descriptive. There are obviously a lot of filters here, so we're not going to go for each one of them, but I'll tell you which one are important for you to choose from. So the first one is really change and here you'll see that it's mainly restricted to the American one. I don't have the paid version. Maybe there's more exchange like in terms of Canadian or Australian that is included in here, but yeah, if you're in those countries, then you can consider purchasing it. If somehow you want to use a screener.

But usually I just stick with the free version that is more than enough for me now, in terms of index, you don't really need to choose it, but then there's the S and P 500 and Dow Jones. What I would pay attention to is sector. Now, this usually comes down to, you know, your background, are you an engineer? Are you a doctor? Are you working in retail? Are you a computer scientist? And this will actually influence the sector you choose because you want to focus on companies that you know a lot. And we'll explain this in a later video, but this is where you use your expertise to give yourself a competitive advantage, same thing for industry. Now, in terms of country here, this is actually referring to the headquarter of the stock? So a stock might be in China, but they can be listed in US so most of the time, I'm actually not too worried about it, this, so I don't really use that one market cap.

This one is quite important. That's basically the size of the stock. So I use this quite often now, in terms of dividend yield, if you are a dividend focus investor, you can use it to find high dividend stocks. So you can use this to filter over a certain percentage. Unfortunately, there isn't actually the reverse where you can filter for lower than a certain percentage of dividend, which is what I would like. There's float analyst recommendation. You don't really need to use those. And I'm just to skip ahead, right? In the States, you don't really need to use those volume relative volumes. So basically for the remaining ones, you can pretty much skip. So those are really the important ones for descriptive. Now, some people, if you are kind of trading short term and you really want to trade earnings, which is very volatile, predictable, and there's a lot of hype going on then perhaps you want to use the earnings dates.

So that really depends on your style. And in terms of analyst, recommendation and options, short or whatnot, you will be doing your own analysis. So you don't really need to look at analyst recommendation. So that's my philosophy. So we can move on to fundamental. Now, when you're looking at fundamental, there are a lot of ratios, probably don't know what that means. I'll try to explain a couple of important ones to help you out here. And for financial, our fundamentals is really about the financial performance of the company is mainly related to financial statements and certain ratios that are calculated. Now, the most common one is really priced to earnings ratio. I don't really use that. I don't think it's very reliable in any means, but a lot of people like to use PE ratio. So if you have a criteria for that, then go ahead.

But in my opinion, it is very noisy in terms of indicator same for PPE. This is the projected price to earnings ratio. This is price, earnings, growth, price to sales. This one is more stable. But in terms of a hard, fast rule in terms of exactly what should the price to sales be there isn't one and price to book ratio, so on and so forth. Skip ahead. And the next one you're probably going to see is the EPS growth. So this is earnings per share growth year after year. So you can think of this like the net income growth. So these are actually quite important, but it also fluctuates a lot? So if you're using ESP Growth for a filter and criteria, like what are, they're making more money than last year or they are planning to make more money next year, or they have been making more money for the last five years.

Then you need to be careful and you always need to think about you are excluding, and that's actually kind of important now in terms of ESP growth for the next five years. In my opinion, I don't think it is super useful because I would imagine most company with projects that they have EPS growth instead of negative, I guess you can filter for something that is very high. So then they have an aggressive forecast, but for the next five years, a lot of forecasts is really just a guess. Now, the next one I really like is sales growth because sales is much more reliable is usually a leading indicator. So I like to use that a lot. There's also quarterly. If that's what you want to use now, the next one is really return on assets and return on equity. So this is really to net income divided by equity or net income divided by the amount of assets within the company.

Some people like to use it. They like to use it stats and compare with the stock increase. So for example, if you look at return on equity is 10%, then they will assume the stock price will go up by 10% as well because the company's growing, they're making more money. So on and so forth. I think it is kind of controversial because usually price does not necessarily follow the fundamental in the short term. So even though the return to equity might be positive to start, price might actually be going down. So you've got to keep that in mind on the next one is current ratio. This is really for liquidity, which is comparing the amounts of current assets and current liabilities within the financial statements within the company, quick ratio, this is more of a short term liquidity measure. And in debt to equity, this one is fairly important and debt to equity as well.

So longterm debt to equity and debt to equity. In terms of gross margin. This one is fairly important to me that if you are selling, let's say a necklace, you are making a profit from the necklace, plus the labor within the store. So on and so forth, excluding sales and excluding headquarter costs. The next one is operation margin. And this one is really including the headquarter costs and sales and administrative expense, and that profit includes tax and all the other random stuff as well. I would say these three are actually quite important. So you want it to your own criteria on what you're looking for. And then there's a couple more in terms of insider analysis and institutional ownership, which can give you mixed results depending on how you're filtering. So this mainly relates to what our people or large institutions are buying or selling to stock.

Okay. So the third one is really technical and this is really the study of price. So how price is changing over time? So here you will see performance. So this is really looking at, you know, what is happening within a week, within a year, within a month. So some people like to use that, I don't personally use it. I did consider using it, but then I couldn't find a very effective and meaningful way to use it. That would improve the, the selection. And then afterwards there's performance too, if you want to do two filters. And then afterwards there's volatility which is how much the stock is fluctuating. And then there are some indicators that technical analysis usually use like relative strength, index gap analysis. That means whether to stock price suddenly jump up or down moving averages in terms of 2050, 200.

Now for most of the stock screener, I see they usually have day, which is 20 days, 50 days, 200 days. If you have been following me or you have actually gotten the free chart course that is in the comments below, then you'll realize I actually use the weekly charts. So I was trying pretty hard to figure out how I can use this to create meaningful criteria because I'm a longterm investor. But it's quite difficult. I'll cover that in a later video. And then afterwards then you'll see change, which is basically how it changed from the previous day or how it changed from Oh-Penn so on and so forth. And then you get high and low. If you're looking for something like 52 week low or whatnot, then you can do that as well. And then afterwards, one of the good things about phase and also chart mail is that there's patterns.

Now, if you are familiar with stock patterns, then you might be interested in this one, like support and resistance, some triangle, some like wedge that is forming. Then if that's what you're looking forward, then you can actually easily filter for that. And then finally, candlestick and I actually think this is referring to today or yesterday's candlestick. So for example, you might be looking for a doji or like a spinning top. However, if you don't know what these are, don't worry because there's actually a whole book that is basically talking about different candlestick patterns and what you should pay attention to. It can get confusing quite quickly. So if you do know what it is, then you can use that as a criteria. I personally don't use it now in terms of beta, that's more a statistics to statistical measure. Yeah. So we can just skip ahead and average true range.

If you want to use it, you can use it. And after hours, I don't really use that. So that is pretty much it's for descriptive, fundamental and technical analysis set in. Once you apply your criteria, then you can use that to find stock start potentially a good time to buy now or sell now, depending on what your strategy is. And that's really it for this video. And my name is Eric Seto. I've been investing for over 10 years and I'm creating this stock screener training which includes the seven videos. And I'll be releasing it for the next couple of weeks. So then I can help you out to become a better investor. And my mission is really to help people without a financial background, to target 30% return from the markets using an hour a week or so through a coaching program called Investing Accelerator.

If you want to learn more than I actually have a free case study in the first link below in the comments and also in the description. And if you're interested in using the charts on using which includes the exact indicators, and it's also free that you can go to the comments and there's actually another comments on a free chart course. And in terms of the giveaway, if you want to participate in the giveaway, then make sure you like this video. And if we get to a hundred likes, then I'll select one person within the comments to win the book Infinite Gain. And if you're interested in learning more about how it gets 30% from the stock market in 12 months, then go to the free case study, enter your email and your name, and then you can click watch. It's a three hour webinar it's quite comprehensive.

And I pack a lot of information in it. So make sure you grab a notebook, grab a cup of coffee and yeah, I'll see you inside. So I'll see you in the next video. It's the two free stock screeners that I recommend, and I'll do a comparison between fit vis and chart mill. So then you know what to use so you can choose between one of them going forward. I'll see you in the next one. So thank you for watching and I hope you enjoyed the video. Please help support me by like subscribe and you can watch the next recommended video here as well. So I'll see you next time.

About the author 

Eric Seto

Eric Seto is an investor with over 10 years of experience. He travelled around the world to help with auditing, accounting, purchase and sale of companies.

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