How best to filter a list of stocks?

1st Sep by Ben H

6 comments 373 reads

Hi all, I've recently joined the platform and am enjoying it so far. I was hoping some more experienced members could give me some pointers; I've assembled a list of about 40 potential UK listed stocks from various sources (mostly the stockranks, screens, my own/the community's ideas and research from financial journalists I like) the list in question has a quality/growth bias, with some momentum and not great value for the most part (the folio I have set up lists most of them as high flyers)

I'm hoping to screen them down some more using a quantitative approach as there's still quite a lot - what I've done so far during the research process is:

Exclude anything under £200m market cap for liquidity reasons
Looked for profitable, cash generative businesses that have cash on the balance sheet and decent interest cover
Checked for reasonable ROCE, ROE and margins
Checked the stockranks (mainly for quality) and stockreports, F scores, Z scores, M scores, etc
Checked for short screens and short interest
Excluded any company incorporated after the financial crisis (to find established businesses that have survived at least one major crisis, covid in my opinion is a bit of an outlier)
Excluded companies not paying a dividend (I'd like to have some income although capital growth is the main aim)
Some other measures like screening for share dilution and checking the shareholder register.

If anyone could give me some advice as to how else to reduce the list further using numerical measures such as ratios and screenable filters that would be appreciated- are there certain characteristics I should be looking for/avoiding? I'm looking to end up with a quality/growth biased portfolio with some income as mentioned above, with the aim of reasonable and sustainable total return.

Thanks

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WarrantStar

1st Sep

Hi. If you select LEARN from the master menu, then SCREENER, you will find out how to screen. The way that this is normally done is to select the criteria that you require, and the screen would output all the companies that meet your criteria. You can keep playing around with the criteria until you get something like the number of companies that you wish to examine in further detail. It is not the normal process to approach this with a list of companies. But you can also use the screen to produce a checklist of passes and fails for each criteria from your screen for every company in your list on a one company at a time basis. The best way is to keep playing around with the screens until you get the hang of them.

turbo

If your list of stocks is saved in a portfolio, switch to 'Bubble Chart View' (icon on right)

You can now see the stocks under different criteria

An example of the three views (same stocks):

N0vice1Nvest0r

Your plan seems very structured and intelligent. I am an absolute novice, however ive been involved with investing since 2021. Personally I would keep your 40 or so picks and start a new one that dives further.

That way you have the initial 40 to keep a check on for x, y, or z. With also having the second one to compare. You may find that one of the 40 that was ignored went on to fly. You can then tweak your screeners to understand why it was missed out and learn for the future.

I use trading view that has all my watched stocks in. That way I have my selected 10/12 stocks, but also closely follow ones that I like but was put off. I mostly only ignore the terrible stocks. The stocks that are alright or need some favourable quarters or news, are monitored. Whilst I invest in the stocks I want.

I have sold stocks I liked, once they triggered a stop loss or "issue". I have also invested at a later date, in stocks that were initially unattractive.

Finally I'm a huge lover of loads of cash or negative 'net debt'.

Ben H

Thanks yes I like the bubble chart view, might give it another go.

Plinkut

Hi Ben - you've filtered out <£200m but one thing to also consider if you haven't already is the bid/ask spread - higher values also indicate low liquidity

Thanks yes I've factored that in, bid/ask spread is one of the other things I've had a look at.

How best to filter a list of stocks?

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Ben H

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