In one of our earlier posts, we mentioned that a list of stocks near their 3 year lows, can be a good starting point for selecting stocks to invest in. This may not be a fool proof method of picking good stocks, but if the initial list is based on stocks which are included in indices of repute, like Nifty50, Sensex, etc., then possibility of going wrong with such stocks is greatly reduced.
Another approach to find quality stocks is to use Stock Screeners. A stock screener is a tool which filters out stocks based on a variety of parameters. Some of these parameters can be P/E, P/BV, Growth Rate, ROC, ROE, etc. We do use a few free ones and would like to share the details here.
Note- This is not a paid promotion of these sites.
Edelweiss Power Screener : Allows filtration of stocks on basis of certain pre-defined, but useful parameters like Bargain Buys (stocks down 70% from their 3 year highs), Delisting candidates, FII favorites, etc.
Moneycontrol Top Dividends : Though this would not qualify as a real screener, we still use it to satisfy our fetish to search for good dividend stocks :-). It even provides a 5 year dividend history of all stocks and allows segregation on basis of industry. One of our favorites.
Magic Formula India : This site hasn’t been updated for last 2-3 months. Nevertheless, it was a good initiative and provided a list of stocks which came up after using the Magic Formula. Don’t know what is a Magic Formula? It actually uses just 2 parameters – Earnings Yield (Inverse of P/E) and Return on Capital to arrive at a list of remarkably good stocks. For a more detailed description, read this.
Edelweiss Customer Screener : Allows filtering of stocks on basis of a variety of parameters. This has, by far the best user interface. No nonsense. Very neat and clean.
ICICI Predefined Search : Like Edelweiss’s power screener, it provides some interesting criterias like Cheapest Stock of large companies, medium and large cap stocks with high dividend yield but low PE ratios, poor man’s stocks, future stocks, etc.
FT.com : Though this is made for global markets, you can use it for Indian markets as well. It offers some unique predefined criterias like Warren Buffet screen, Benjamin Graham screen, Jason Zweig screen. Apart from these, it offers a comprehensive list of other parameters to choose from. This is a gem of a screener.
NDTV Profit Screeners : It offers a plethora of interesting predefined screeners with criterias like sector outperformance of underperformance on ROE, P/E, DY, sales, profits. It also offers technical screeners for the traders (not us). :-)
Value Explorer : This is also a global stock screener with all necessary parameters. Though a bit technical, it’s an interesting tool to have in one’s stock selection armour. Do read Getting Started section to fully utilize this tool.
Value Investing India : This tool provides predefind filters like Dogs of India (like Dogs of Dow), Magic Formula, 52 week high/low and insider transactions.
Capital4 : It allows one to build screeners based on one’s own parameters or predefined ones. Do check the predefined screeners. They sometimes throw up interesting results.
Edited (August 20, 2012): 2 More brilliant screeners:
Edited (January 13, 2015): 1 More brilliant screener: