To succeed in the stock market, investors need fast and accurate insights. For this, stock screeners can be useful. Stock screeners help by filtering stocks based on key metrics like valuation and profitability, making it easier to focus on high-potential opportunities. In this article, we will cover how this tool can help you stay ahead of the market.
Why Use a Stock Screener?
A stock screener is an online tool that helps investors filter stocks based on parameters such as market capitalisation, price-to-earnings (P/E) ratio, return on equity (ROE), and debt levels.
Rather than spending hours reading financial reports, investors can use filters to quickly find companies that fit their investment goals.
Stock screeners make investment research faster and help investors keep up with market trends. Here’s why they’re useful:
1) Faster Research
Analyzing hundreds of stocks manually is nearly impossible, especially with different stocks getting featured in different stock market news every day. A stock screener does the heavy lifting by narrowing down stocks that meet specific criteria, making the research process more efficient.
2) Customisation
Whether you’re looking for high-growth companies, undervalued stocks, or high-dividend payers, a screener allows you to apply multiple filters to find stocks that align with your investment goals.
3) Real-Time Data
Many stock screeners provide real-time updates, ensuring that investors make decisions based on the latest financial data, stock prices, and market movements.
Case Study: How Stock Screeners Help Identify Growth Stocks
Stock screeners are especially useful in spotting high-potential companies before they gain the market’s attention. Let’s look at some examples:
Persistent Systems vs. Coforge (IT Sector)
- Persistent Systems grew its revenue by 19% YoY in FY24, with an ROE of 24%. Its strong presence in cloud computing and AI-driven solutions has helped its growth and expansion.
- Coforge reported 24% revenue growth and has a ROE of 24.1% The company benefits from its focus on BFSI and digital transformation services.
An investor using a stock screener could filter IT stocks based on revenue growth, ROE, and profit margins to compare these two companies efficiently.
Tata Motors vs. Mahindra & Mahindra (EV Sector)
- Tata Motors dominates the EV market with a 62% market share and has aggressively expanded its electric vehicle lineup.
- Mahindra & Mahindra (M&M), with a YOY quarter sales growth of 17.48 in FY24, is catching up with its EV push and remains strong in the SUV and tractor segments.
Using stock screeners, investors can filter auto stocks based on EV sales growth, P/E ratio, and operating margins to determine which company has a stronger growth trajectory.
Paytm vs. Bajaj Finance (Fintech vs. Traditional Lending)
- Paytm currently trades at ₹840+ with a negative P/E ratio of -64, reflecting its aggressive growth strategy and ongoing investment phase.
- Bajaj Finance has a P/E ratio of 34.65 and a stable ROE of 22.32%, making it a more stable and profitable investment.
By filtering stocks based on valuation metrics like P/E ratio, debt-to-equity ratio, and EPS growth, investors can compare the risk-reward balance between an emerging fintech player and a well-established lender.
Conclusion
Stock screeners take the guesswork out of investing. They provide quick, data-driven insights, allowing investors to make informed decisions with confidence. Whether you are a trader looking for short-term opportunities or a long-term investor hunting for value, using the right stock screener can give you a competitive edge in the market. However, note that you should use a screener with comprehensive research and technical analysis to make an informed decision.
