Screening for Investment Gold

Thanks to new online software, you can tailor your stock portfolio like the pros

estimates of revenues, earnings and even the rate they feel Acme can grow its profits.

The market takes these sorts of assumptions seriously because they help determine how much a stock is worth now and in the future. Needless to say, the figures stockpiled by consensus estimate firms will probably dip as well. To provide the most accurate figures, a good screen will update its reservoir of numbers regularly.

GETTING OUT OF THE STARTING BLOCKS
In our search of stock screens on the Internet, we came up with four winning sites where you needn’t pay a dime for the goods. All update daily, and use solid sources for their data. Perhaps the simplest and most straightforward can be found on Quicken’s site (www.quicken. com/investments/stocks/search). There you can screen the entire market or go industry by industry, using a no-nonsense format.

Marketplayer (www. marketplayer.com) is by far the most comprehensive in its choice of different criteria. Our only complaint is that Marketplayer’s site can be a bit daunting if you’re just learning to screen. A lot of the terms–for example, forward P/E (a company’s price-to-earnings multiple for the upcoming year)–may be a bit much for initial investors. We suggest that you first go to the simple screening heading in the left margin of the site or try your hand at a few of the model screens provided. Another solution: click on the support heading in the left margin and send a query for assistance to Marketplayer via e-mail.

Another site we like, DailyStocks (www.dailystocks.com), not only offers a choice of screens, but also has links to a veritable diamond mine of company and stock information. Again, the terminology can get a bit meaty; as an entry point, we suggest you click at the heading “Quick Pre-Screened.” There you’ll find a number of pre-set screens to help you get up to speed. Finally, you might want to check in at www.stockscreener.com, run by Hoover’s.

SEARCHING FOR GOOD IDEAS AND PICKS
Once you’ve honed an ability to parse and pare the ma
rket, what do you do? For one, even if you’re a market expert, it makes sense to first take a test drive by running a few of the prepackaged screens a site offers. At DailyStocks’ pre-screened window, for instance, it’s possible to call up a list of shares below $10 in price with an average annual growth rate of 20% or greater.

After a few runs with the training wheels on, you’ll probably want to start with a few of your own creations. You’ll find that while screens are chock-full of features that help whittle the scope of the market down to size, many screens can be surgically precise as well, pruning your choices down to anywhere from one to several stocks.

Where to start? One surefire method is to copy the moves the pros use. Money managers who are looking for companies that can grow earnings quickly often resort to a tried-and-true rule: never pay for a stock whose P/E is greater than its anticipated earnings growth rate. Translated

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