Information can be power. But when it comes to picking stocks to buy, sell, or trade too much information can create analysis paralysis. This is due to the sheer volume of stocks that are available to trade.
The MarketBeat stock screener is a straightforward way for investors to narrow the field of available stocks and find a manageable subset to research.
Promotes Diversification – Investors know the importance of having a diversified portfolio. The MarketBeat stock screener allows investors to eliminate certain criteria so they “force” themselves to consider stocks that are not already in their portfolio. For example:
- A conservative investor with many blue-chip, large-cap dividend payers may want to use the screener to show only mid-cap or small-cap companies.
- An aggressive growth investor may want to use the screener to find a high-yielding dividend stocks as a hedge against volatility.
Jump Starts an Investor’s Research – You’ll notice that many of the fields in the stock screener are like the fields that investors can find on a stock’s profile page. This means that the screener can allow investors to perform some of their research by looking at companies that meet specific criteria.
Ideal for Sector Trading – Sometimes investors want to break from their overall investment thesis to “ride the hot hand.” They can use the MarketBeat stock screener to look for opportunities in different sectors. For example:
- At the start of the Covid-19 pandemic many investors flocked into “work from home” stocks in the technology sector.
- Conversely, in 2022 as the economy started to slow down, many investors looked to rotate into “risk off” sectors such as utilities and energy to preserve gains they made during the pandemic bull market.
Helps Investors Generate Ideas – Like a fidget spinner, a stock screener can be maddeningly addictive. But they are useful for investors and traders who are looking for different ideas or to test a different thesis.
What are the Benefits to Using the MarketBeat Stock Screener
It Uses Familiar Technology - Screeners are found in all aspects of e-commerce. Retailers build these functions into their websites to allow consumers to quickly find the specific items they want. The same principle applies to a stock screener. The MarketBeat stock screener features a database of stocks, a set of variables, and a screening engine that matches individual stocks with the variable selected.
It’s Comprehensive – Many active traders choose stocks based on specific fundamental or technical metrics. With that in mind, the MarketBeat stock screener has dedicated tabs that allow investors to narrow their search based on their preferred metrics.
Screens can be Saved – Once investors find a screen that works for them, it can be saved so they can revisit it at their convenience.
What are the Limitations of Stock Screeners?
Only as Good as the Information Requested - The largest limitation to stock screeners is that they are only as good as the information that is put into them. And this can be trickier than investors think. For example,
- Many screeners require investors to enter data into several fields to limit the number of stocks to a manageable number.
- However, if the user makes their search criteria too specific, they can wind up getting no results or a set of results that is too limiting.
Does Not Provide Context - Another limitation is that a stock screener will show you the what but lacks the ability to tell you the why. The MarketBeat stock screener can account for positive or negative news sentiment, but it doesn’t account for specific news events (both current and ongoing) that may affect the price of a stock.
Reflect a Moment in Time – Volatile stocks show stocks that meet the screening criteria at that moment in time. Investors will want to make sure they perform their own research to confirm that the stock is still a desirable choice based on those criteria.
Tips for Beginners to Stock Screeners
If you’re relatively new to investing, or to picking your own stocks, a stock screener can be overwhelming. It’s like walking into an ice cream shop with 56 assorted flavors. Where do you even start? Here are some tips to help you get started.
Don’t Narrow Your Funnel Too Early – In the traditional sales funnel, companies try to capture as many potential customers as possible. Then, as the customer provides more information about their specific wants and needs, the customer is moved further down the funnel.
How does that apply to the MarketBeat stock screener? Remember that a stock screener uses the same technology found in many retail screeners. So while It’s true that the whole purpose of a stock screener is to point you to stocks that meet specific investment objectives, many beginning investors may not know exactly what to look for. In this case, one strategy is to start with a broad search. Then, as you look through the list of stocks you may find other specific criteria to help fine-tune your search (I.e. move you down the funnel).
Pick One Strategy – Just because the screener provides a wide range of screening criteria doesn’t mean investors have to use them. In fact, that may hurt an investor’s chances of getting the results they need. Many long-term investors don’t need to be concerned as much about how much volume a stock is trading at. But if you’re an income investor, you may be concerned about finding only the dividend stocks that pay at or above a certain dividend yield percentage.
Learn As You Go – Most investors aren’t financial professionals. The MarketBeat stock screener can serve as a learning tool for investors and traders to better understand how specific ratios or technical indicators affect the assortment of stocks they can choose from.
