Presently, stock market apps dominate the online stock trading sphere more than any other resource available to novice and advanced traders. The main reason for this can be attributed to the growing awareness of the importance of trading for the amplification of wealth and future financial security.
With an abundance of stock market apps on the app store, it’s quite apparent that there must be fierce competition between stock market apps to attract the right audience in the highest number possible. This competition between stock market apps has been playing out in favor of people who trade stocks, as they get to avail of premium stock trading features such as a stock screener.
A stock screener is a financial tool that allows stock investors to filter through a myriad of stocks based on certain parameters or filters. It serves as an indispensable tool for traders who want to acquire an eagle eye on their portfolio. However, the true potential of stock screeners remains veiled until the trader optimally understands what filters they can choose on a screener. This blog is written to provide you with those answers.
Fundamental filters that can be used on a stock screener:
1. Basic Stock Attributes: The following are some of the basic attributes that can be found on nearly all stock screeners.
- Sector: It is a broad classification that indicates the type of market a company is competing in.
- Industry: Often confused with the sector, the industry provides a more specific breakdown of the market in which a company is active. For instance, a company in the healthcare sector could be in healthcare information services, healthcare plans, or other industries.
- Market Capitalization: Market Cap is a key indicator of a company’s size and its relative importance in the stock market.
- Stock Type: Under stock type, an investor can choose what type of stock they’re interested in, such as ETFs, Closed-End Funds,, etc.
- Country/Region: This filter can be used to identify where the company is headquartered.
- Shares Outstanding: It signifies the total number of shares available to trade.
2. Dividend: It is the payment made to shareholders.
- Dividend Yield: It signifies the return on investment.
- Payout Ratio: The payout ratio signifies the proportion of a company’s earnings distributed as dividends.
3. Stock Volume: It represents the quantity of stocks exchanged during a specific time frame. Increased trading volume, whether due to buying or selling, indicates growing market interest for that specific company.
4. Price and Profit: These figures help an investor evaluate the financial health of a company.
- P/E ratio: The price/earning ratio measures the total price of a stock relative to its annual earnings per share. The lower the P/E ratio, the better it is for the investor.
- Gross Margin: It quantifies a company’s gross profit as a percentage of its revenue.
- Net Profit Margin: This ratio reveals the portion of sales revenue a company retains after accounting for all expenses, including interest and taxes.
- Effective Tax Rate: it is the percentage that we get after dividing the company’s actual income tax expense by its actual net income.
5. Leverage Ratios:
- Debt/Equity Ratio: It illustrates a company’s debt relative to its assets.
- Debt/Capital Ratio: It is determined by dividing the company’s interest-bearing debt by the total capital. Total capital comprises all interest-bearing debt along with shareholders’ equity, encompassing items like common stock, preferred stock, and minority interest. Interest-bearing debt encompasses both short and long-term liabilities.
To conclude, the availability of filters on stock screeners differs from platform to platform. To find your optimal stock screener, it can be a good idea to look at stock tips and explore the options available to you. Go ahead with the one that offers all the filters that you would need to make your trading decisions.