The complete guide to free stock screen tools

Larry MacDonald
Globe Investor Magazine Online, February 1, 2008

The popularity of stock screens on the Internet continues to grow, giving individual investors more and more powerful stock picking tools.

"You're probably the best stock picker you know," writes Jack Hough in a recent column extolling the superiority of do-it-yourself stock screening. "I'm not just kissing up."

The SmartMoney.com associate editor makes similarly provocative statements in favour of stock screening (supported with findings from research studies) in his new book, Your Next Great Stock: How to Screen the Market for Tomorrow's Top Performers (2007).

There are a growing number of free stock screen tools on the Web, but trying to decide among the many available could be the cause of a headache or two. It would help to have a guide. Hence, the following survey: It describes some of the better packages with the help of reviews and experienced users.

Of the offerings below, they're almost all just for U.S. stocks. StockCharts.com covers stocks listed on Canadian exchanges (the "TSX" field in Zacks.com spits out only a handful of companies), while the Globeinvestor.com screener covers Canadian and U.S. stock exchanges (plus over-the-counter U.S. stocks). The links to each screener are at the bottom of the article.

MSN Deluxe Stock Screener

The Microsoft stock screener, available via a small software download, is the free stock screener most often cited as a favourite. Jacky Pandion, of www.Mechanical-Investing.com, calls it "by far the best free stock screener over all." And Norman Rothery, chief investment strategist at Dan Hallett & Associates, describes it as his preferred screener.

With more than 500 criteria from which to choose, MSN Deluxe has the most capability for tailoring searches. Unique categories are the StockScouter Ratings (a proprietary ranking of stocks) and Advisor FYI (warning signals, such as rising inventories). The Trading & Volume section offers a good variety of criteria for technical analysis.

MSN Deluxe also appears to have the most flexibility. The values to be inputted as thresholds for a given criteria aren't constrained to numerical form: they can also be variables or formulas. Moreover, the standard operators (=, >, and <) are supplemented with "High as Possible" and "Low as Possible" settings, which returns the top 15 to 25 of the highest or lowest values for a criteria. This is a useful feature because a search using a numerical value, say price/earnings ratio < 8, may turn up nothing if a sector has a high average price/earnings ratio (e.g. technology) or the general market is in a strong bullish phase and valuations are high.

The interface is clean and straightforward. Just a click on a data-entry box gets the user going with a menu of options. A handy feature is the Field Description Box, which defines various selection criteria as the cursor rolls over them. Customized and predetermined searches (e.g. Dogs of the Dow) can be easily modified and exported. Lots more functionality is to be discovered by the intelligent screener.

Yahoo Finance Screener 2.0.8

Yahoo Finance Screener 2.0.8 is another favourite but is less powerful than the MSN Deluxe offering. But the interface is similar to MSN Deluxe in appearance and use. A unique feature is the ability to view a table of selected stocks as a series of histograms.

A key difference from other screeners is the large number of "Share Performance" variables (for example price gain in the last hour). This should appeal to day traders. Also of appeal to day traders is the Yahoo Finance MarketTracker, a subscription upgrade that screens on the basis of real-time data. It has a 30-day free trial.

Morningstar Stock Screener

The Morningstar Stock Screener is included in the favourites list of Investopedia.com and other reviewers. A plus is the ability to select stocks with the help of the proprietary Morningstar Rating system. Like the MSN and Yahoo offerings, the stocks outputted from a customized or predefined screen can be modified to add/subtract criteria or change values (and exported to spreadsheets).

The Morningstar offering emphasizes portfolio-building functions. Stocks can be filtered by "type" (e.g. cyclical), and "style" (e.g. large-cap growth). The "Score These Results" button assigns different weights to various selection criteria. One of the more interesting features, the "Test in a Portfolio" section, provides access to Morningstar's X-Ray overview feature, which analyzes how well the screened securities complement an existing portfolio.

Globeinvestor.com Stock Filter

As for free stock screeners in Canada, Mr. Rothery says the "situation, as far as I know . remains poor." Of those available, "the best is the one at globeinvestor.com," he adds. It has data-entry boxes to input minimum and maximum values for nine selection criteria, including percentage/dollar change in stock price, price/earnings ratio, price/book ratio, dividend yield, and three-year percentage change in revenue/profit.

The "security-type" criteria can quickly display lists of different securities, such as warrants, preferred shares, exchange-traded funds, etc. Along with data provided by globeinvestor.com tables, this capability can be quite useful to investors primarily interested in those types of securities. Want to know what Canadian ETFs are available? Use the globeinvestor.com filter to display a list and then drill down for ETF-specific information.

Other Screens

The easy-to-use Nasdaq Guru Stock Screener, designed by validea.com, identifies stocks satisfying the investing strategies of eight of "the world's most successful investors," including Peter Lynch, Kenneth Fisher, and Benjamin Graham. Users can cull for stocks with "strong" and/or "some" probability of being of interest to an individual guru - or up to five gurus simultaneously.

The Kiplinger.com Stock Finder might appease some dividend-growth investors. It has a field defined as "consecutive years of dividend growth (up to 20 years)." None of the other free screeners appear to have such a field.

StockCharts.com offers some free features for enthusiasts of technical analysis. Of note are the Predefined Scans that rank stocks by a wide range of technical indicators, such as moving average crossovers, candlestick patterns, and point and figure signals. It covers U.S. and Canadian exchanges.

The Zacks.com Custom Screener has a strong suit in sorting stocks by analysts' buy/sell ratings and earnings forecasts (levels and changes). MSN Deluxe covers most of these criteria too, albeit with some differences. For example, Zacks.com uses standard deviations to measure variability in analysts' estimates versus MSN's spread between high and low estimates.

If one doesn't mind anteing up for a subscription as low as $5.95 (U.S) per month, the SmartMoney.com screener is a good choice. It has some things the freebies don't. For example, a Thomson Financial feed provides a better set of fields for insider trading variables. And two special operators, "Top % in" and "Bottom % in," allow users to screen for highest or lowest values of a criteria (e.g. highest and lowest price/earnings ratio) in an industry, sector, or index (e.g. S&P 500).

Caveats

No free screener does the best job for every conceivable search. MSN Deluxe might offer the best chance over all but some of the others may do a better job depending on the search parameters specified. And it is quite possible for the same search criteria inputted into different screeners to return dissimilar lists of companies.

"Screeners seem like great tools for finding errors in databases," quips Michael James Weiner, who writes the Michael James on Investing blog. While this may be a lesser problem for subscription-based screeners and the better free screeners, Mr. Weiner's reservations do highlight the issue of data quality and timeliness. Another caveat, as Investopedia.com notes, is the inability of screeners to sort on the basis of intangible variables (e.g. the value of a brand name).

Best free stock screeners (and where to access them)

United States

MSN Deluxe Screener
Yahoo Finance Screener
Morningstar Stock Screener
Nasdaq's Guru Stock Screener
Kiplinger.com Stock Finder
StockCharts.com Predefined Scans
Zacks.com Custom Screener

Canada

Globeinvestor.com Stock Filter

Special to The Globe and Mail