Stock Screening Services
Posted on 28. Dec, 2010 by TheFreeInvestor in Stock Screens
[Photo by: danielfoster ]
Most of the time, for stock screening, I leverage a few select newsletters to get a list of interesting stock ideas. From that list, I proceed to perform my own detailed due diligence on those stocks and decide whether to invest or not.
However, recently I have been looking around for a versatile and free (or cheap) stock screening service that I can use to build my own screening criteria or at least play around with it. Most of the popular services, e.g., Yahoo Finance or MSN have very limited number of criteria that you can choose. For now, I have settled down with the stock screening service available at advfn.com. This free screener provides many more criteria than any of the other free services that I have looked at. You can choose almost all of the data elements of the financial statements – income statements, balance sheets or cashflow statements. In addition, you can choose from many of the ratios, growth factors and other company characteristics. Though I could not find all the criteria that I wanted to use, it was the best free service I could find on internet. I don’t know the level of accuracy of the financial data on this website. But, the few line items I checked turned out to be accurate. So, I will continue to use this service unless I discover some significant data discrepancy.
The following is one of the screening criteria that I have been looking at recently. The screen is targeted at finding healthy, growing companies at a cheap price. I guess, you can call it QRP (Quality at Reasonable Price). Here are the criteria –
1. Size: Higher than a minimum limit of $250 million in market capitalization
2. Low Market Value / 4 Year Average FCF: Less than 15; selling at a cheaper multiple of FCF
3. Low Debt / 4 Year Average FCF: Less than 5; lower risk from financial leverage
4. Positive current FCF and OCF: Healthy company
5. Growing FCF and OCF: Healthy, growing company
6. High 3 Year Sales Growth Rate: At least 15%; growing company
7. No financial (e.g., banks or insurance) companies: Financial company metrics is not comparable with similar metrics from any other industry companies
It seems to be difficult to find time series data, e.g., 4 year average FCF etc. So, for now, till I find a way to get the 4 year data dump, I am using the current FCF. But, FCF can be lumpy. So, if possible, it is a better idea to use average of few years. There is nothing sacrosanct about the minimum and maximum numbers. You can play around with it by changing the numbers.
Approximately 60-70 companies showed up in the result of this screen. As I looked over the list, few of the companies in the digital entertainment world caught my eye. These companies are – Activision Blizzard (ATVI), Discovery Communications (DISCA) and Dolby Laboratories (DLB). I have already written about Dolby. So, in the next few days, I am planning to write an analysis of either Activision or Discovery Communications.
Stay tuned !
[Disclosure: As of the publication of this post, I hold long position in ATVI and DLB. Please read the disclaimer statements on this site.]
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