Penny Stock Screener

How to use a Penny Stock Screener

Using a penny stock screener has become a necessity. Why rely on stock picking newsletters when you can screen to find your own for free? Taking control and being an informed penny stock investor is the best way to protect your risk capital. But, if you’re like most of us, there is just not enough time in the day to do everything you want within the 15 to 18 waking hours. This is especially true if finding time to do in-depth penny stock research is on your list. One solution for the time crunched penny stock investor is to take advantage of an online penny stock screener.

Each stock screener is built with three components: a database of publicly traded companies, a set of variables used to screen the companies, and a screening engine. To use a the screener, you answer various questions and enter a set of criteria, such as company size, rate of return, margins, volatility, stock exchange, stock type, industry, P/E ratio, etc. The stock screener then compares the thousands of companies within the database based on your criteria, and generates a list of matches for your review.

For a beginning or new penny stock investor, knowing what criteria or percentages to enter into a stock screener can be daunting. Many times, you need to have some previous research experience in order to know what you’re looking for in a stock. Don’t despair though; there is an alternative.

Pre-defined penny stock screener pages
are an excellent starting point.

For beginning investors, using standard and pre-defined stock screeners is a great way to improve your trading profitability and lower risk. Each pre-defined stock screen is created with an established set of parameters, which will return a defined result. For example Yahoo Finance describes their “Large, Growing, and Cheap Stock Screener” page this way:

“Stocks with market capitalization greater than or equal to $5 billion with earning growth estimates this year greater than equal to 20. Also with price to earnings ratios less than or equal to 20 and price to sales ratios less than or equal to 1.3”

There are many other pre-defined screens to choose from, depending on the strategy you prefer.

Stock screeners are an excellent source of quantitative financial information for a company, but they will not give you information regarding the company’s qualities, such as management expertise, R & D strength, pending lawsuits, labor relations, etc. For this information you need to conduct further research. Many online brokers offer excellent charting programs and other tools to help with your due diligence on a penny stock company and its performance.

Here’s a tip: Before selecting a stock screener, be sure to find out when the data is updated. Using out dated information is meaningless.

Overall, penny stock screeners are excellent investment tools to use to begin your penny stock search. They save you hours of preliminary research time. From a narrowly defined group of companies you can select 5 or 10 companies that you feel are worth a closer look. By using parameters that fit your investment plan and strategy, you can find the best stocks to invest in and feel comfortable with the results.

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