Using Stock Screeners 101: How to Filter Stocks for Your Strategy

Introduction

Using a stock screener means applying a set of filters to a large list of companies so you quickly find those that match your goals. A screener saves you from manually sifting through thousands of names and helps you focus on what matters to your strategy.

Why does this matter to you as an investor? Because time is limited and markets are noisy, a clear filter set helps you find candidates that deserve deeper research. Want to find value bargains or high-dividend income stocks without the guesswork?

This article teaches you how to set up simple screens, combine technical and fundamental filters, save and refine screens, and avoid common mistakes. You will see practical examples using real tickers, step-by-step filter logic, and actionable next steps you can try today.

Key Takeaways

• Stock screeners let you reduce thousands of stocks to a manageable list using objective filters.
• Match filters to your strategy, for example low P/E and positive EPS growth for value, or high dividend yield for income.
• Combine basic fundamental and technical filters, then sort and inspect the top hits manually.
• Save named screens and update them regularly to catch changing market conditions.
• Avoid overfitting by keeping filters simple and testing them on past data or paper trades.

How Stock Screeners Work

A stock screener is a tool that applies conditions to a universe of stocks and returns only those that meet every condition. Typical conditions include financial ratios, performance metrics, market cap ranges, and technical indicators.

Most screeners let you choose a universe first, for example all US-listed stocks, the S&P 500, or a sector like technology. Then you add filters, for example P/E less than 15, market cap above $2 billion, and trailing twelve-month revenue growth above 10 percent.

Common filter types

• Fundamental metrics: P/E ratio, P/S ratio, dividend yield, return on equity, revenue and EPS growth.
• Technical metrics: 50-day moving average, relative strength index, price above/below moving averages.
• Market data: market capitalization, sector, exchange, average volume.

Setting Up Screens for Common Strategies

Different strategies need different filters, and you should start with a clear objective. Below are three beginner-friendly strategy examples and the basic filters to try for each.

Value screen: low P/E, decent growth

Objective: find companies trading cheaply relative to earnings but not in decline. Basic filters to apply:

1. P/E ratio, trailing or forward, less than 15.
2. Market capitalization greater than $1 billion to avoid tiny microcaps.
3. EPS growth, trailing 12 months or projected, greater than 5 percent to ensure positive momentum.
4. Debt to equity less than 1.0 if you want extra safety.

Example: you might run this screen on the S&P 500 and find a few names that meet those criteria. Remember, a low P/E alone is not a buy signal, it's a starting point for research.

Growth screen: high revenue or EPS growth

Objective: find companies expanding quickly. Basic filters:

1. Revenue growth year-over-year, greater than 15 percent.
2. EPS growth year-over-year, greater than 15 percent.
3. Market cap above $2 billion to focus on established growth firms.
4. Return on equity above 10 percent as a quality filter.

Example: a growth screen run across the Nasdaq might return names like $NVDA historically, but you will often see smaller cap fast growers too. Sort results by revenue growth to prioritize the fastest growers.

Income screen: high dividend yield and safety

Objective: find reliable dividend payers with attractive yields. Basic filters:

1. Dividend yield above 3 percent, or a custom threshold you prefer.
2. Dividend payout ratio less than 60 percent to avoid unsustainable yields.
3. Free cash flow positive or operating cash flow positive for coverage.
4. Market cap above $5 billion for added stability.

Example: applying this to the utilities sector often returns several candidates. Check dividend history to see if payments are stable or growing.

Step-by-Step: Building and Saving a Screener

Most screeners follow the same workflow. You will usually sign in, choose a universe, add filters, run the screen, sort results, and then save the screen for later. Here's a step-by-step you can follow on any mainstream screener tool.

1. Choose the universe, like US exchanges, S&P 500, or a sector.
2. Add primary filters, starting with market cap and one key metric for your strategy, for example P/E or dividend yield.
3. Add secondary filters for quality or liquidity, like positive EPS for the last 12 months, and average daily volume above 200,000 shares.
4. Run the screen and sort by the most relevant column, for example lowest P/E or highest dividend yield.
5. Inspect the top 10 results manually: check recent news, earnings trends, and balance sheet items.
6. Save the screen with a clear name, like "Value: Low P/E + Growth", and set a schedule to run it weekly or monthly.

Saving screens helps you track changes over time. Many platforms let you receive alerts when new stocks meet your criteria so you don't have to run the screen manually every day.

Practical tip: start broad, then narrow

If you use too many strict filters at first you might get zero results and feel discouraged. Start with a few core filters to get a manageable list, then add one or two quality filters to refine the list. This helps you understand which filters are doing the heavy lifting.

Combining Fundamental and Technical Filters

Using both fundamental and technical filters can help you time entries or avoid buying into weakness. For example, you can combine a value screen with a simple technical trend filter.

Example filter set: P/E less than 15 and price above the 200-day moving average. This finds cheaper stocks that are still in an overall uptrend. Another example: a growth stock with revenue growth above 20 percent and RSI below 70 to avoid overbought names.

Technical filters are especially useful if you plan to trade rather than hold long term. They help you avoid stocks that meet fundamental criteria but are in a technical downtrend.

Real-World Examples with Numbers

Example 1, a value search on the S&P 500. Universe: S&P 500. Filters: P/E < 15, market cap > $5 billion, EPS growth (TTM) > 5 percent. Result: you may get single-digit to low-double-digit hits depending on market conditions. Inspect each for recent earnings surprises, management commentary, and sector trends.

Example 2, an income search across US-listed stocks. Universe: US exchanges. Filters: dividend yield > 3 percent, payout ratio < 60 percent, free cash flow positive. Result: you might retrieve 200-400 names. Sort by yield and then by payout ratio to prioritize sustainable income.

Example 3, growth + momentum. Universe: Nasdaq. Filters: revenue growth (YoY) > 25 percent, market cap > $2 billion, price > 50-day moving average. Result: expect a list of high-growth names, often with higher volatility. Use this list for further research on competitive advantage and margins.

Common Mistakes to Avoid

• Overfitting your screen, using too many strict filters. This can return zero results or only rare outliers. How to avoid it: start simple and add one filter at a time.
• Relying on a single metric like P/E. It ignores context such as growth rate, debt, and cash flow. How to avoid it: pair P/E with growth, cash flow, or ROE.
• Ignoring liquidity. Picking stocks with tiny average volume can make trading difficult. How to avoid it: add an average daily volume or minimum market cap filter.
• Not saving and testing your screens. If you don't save a screen you won't track how the results evolve. How to avoid it: name and save screens and set alerts if available.
• Blindly trusting screener outputs. A screener finds matches but does not replace full research on management, competitive position, or risk. How to avoid it: use the screener as a first step, then read filings and recent news.

FAQ

Q: How often should I run or update my screens?

A: It depends on your strategy. For long-term investors, monthly or quarterly is fine. For swing traders you may run screens weekly or set alerts. The key is consistency and reviewing results rather than running screens randomly.

Q: Can I use screeners for international stocks?

A: Yes, many screeners cover international exchanges. Be mindful of different accounting standards, currency risk, and data availability when screening non-US companies.

Q: What metrics are best for avoiding financial distress?

A: Look at debt to equity, interest coverage ratio, and free cash flow. Also check operating cash flow trends and recent liquidity ratios to spot stress early.

Q: Should I trust screener rankings and scores?

A: Screener rankings are useful for prioritization but should not replace your judgment. Use rankings to order results, then perform qualitative checks and read earnings reports before making decisions.

Bottom Line

Stock screeners are a powerful, time-saving tool that help you find stocks that match your strategy. They are not substitutes for research but act as efficient first filters to focus your attention.

Start with a clear objective, use a few well-chosen filters, save and test your screens, and combine fundamental and technical checks when appropriate. At the end of the day, a screener will point you to candidates, but you still need to do the homework.

Next steps you can take today: pick a screener platform, create a simple saved screen for your goal, and review the top 10 results manually. Over time refine the filters based on what you learn and set alerts to catch new opportunities.