Friday, June 19, 2009

Screening For Value

Google Finance is easy to use and provides useful glancing information across a vast plethora of individual stocks. Unfortunately, that's where its utility ends. As we've discussed before, it contains a great number of errors, some of which (e.g. dividend information) are systematic and therefore not simply specific to a particular stock.

We often get asked how we screen for value stocks. While Google Finance once again provides an intuitive and user-friendly tool in this regard, it falls far short of providing the necessary categories that a value investor requires. For the resourceful investor, however, there are other options!

One useful tool we have come across is provided by Financial Visualizations at . In addition to being able to search across standard screens available on many other sites, investors are offered screening options above and beyond what one would normally expect. For example, should an investor be interested in all stocks with an expected 5-year EPS growth above 10%, ROE above 10%, debt-to-equity under 1, insider ownership above 10% of market cap, gross margins above 20%, a quick ratio above 3, that institutional investors are bearish on, this site will provide a list of stocks that match this criteria.

While sites such as these can be useful for screening purposes, it can never replace the diligence and careful analysis required to properly value each security in which an individual is interested in investing. The screening tool is the beginning, not the end, of the investment determination process.

Disclosure: None


Anonymous said...

Fantastic link. You guys continue to amaze me and should have more comments on your site than you do. Where does this screening site get their data? Is it more or less reliable than Yahoo's data?

Keep up the good work, I see some companies appearing both on my screens and on the Magic Formula site so I take that to be a good thing.

-Epic Ahab

Saj Karsan said...

Thanks, Ahab!

I don't actually know what their data source is, but what ever the case may be, it is still best to verify with other sources before making an investment decision.

Anonymous said...

They seem to have okay international data, but after checking some ROE and div yields against Yahoo, some did not match. I tend to trust Yahoo more because of the millions of eye balls that use Yahoo each day.

-Epic Ahab