How to use a stock screener (the right way)
Most screeners fail because they chase "cheap" stocks without checking quality. A good screener combines value, profitability, financial safety, and (optionally) momentum.
A simple starter screen
- Positive free cash flow
- Reasonable valuation (avoid extreme multiples)
- Solid profitability (ROE / margins)
- Manageable leverage (debt-to-equity, interest coverage)
Common mistakes
- Using P/E alone (ignores balance sheet and cash flow).
- Buying "cheap for a reason" without checking distress risk.
- Ignoring sector differences (multiples vary by industry).