Stock screeners are one of the most powerful tools available today for investors to find new stock ideas. With just a few filters, you can instantly scan thousands of stocks to find the ones that match your investing criterias.
Instead of spending hours scrolling through Twitter or bouncing between stock ideas, a good screener can help you focus your research time on a handful of stocks that fit the unique qualities you look for in the investments you make.
No matter what investing style you like, whether you’re looking for stable, high-quality compounders, undervalued growth stocks, or deep value opportunities, screeners help you quickly find new stock ideas that match your approach.
In this article, we’ll walk through 5 stock screens inspired by some of the world’s most well-known investors. Each one gives you a simple, proven way to discover high-quality stock ideas, and you can easily tweak these screens based on your individual preferences.
We’ll cover screens inspired by:
- Warren Buffett & Charlie Munger
- Peter Lynch
- Ben Graham
- Joel Greenblatt
- Cathie Wood
Let’s dive in!
What are Stock Screeners?
Stock screens help you filter the market, showing only stocks that meet your specific criteria.
First, these are some different filters you can add to any of the screens below.
Additional Filters
To refine the results you get from these stock screeners even further, you can try adding these kinds of filters:
- Exclude certain industries (Ex: energy, mining, financials, biotech)
- Filter by region (Ex: US-only or international stocks)
- Set a market cap range (Ex: large-cap, mid-cap, or small-cap focus)
- Limit to profitable companies (Ex: net margin greater than 0%)
It’s generally best to aim for a sweet spot of getting 10-50 results with each stock screen that you run.
If you’re getting less than 10 stock ideas per screen, you might not find enough stocks that you like for further research, while if you get over 50 ideas, you might not have time to sift through all of them.
Small-Cap & Micro-Cap Screeners
Sometimes, the best value is where nobody’s willing to look.
If you’re looking for undervalued small-cap or micro-cap stocks, apply a market cap filter to any of the screeners below.
Market Cap Limits:
- Small-Cap: Less than $2 billion
- Micro-Cap: Less than $250 million
Why use this? Smaller stocks often have more room to grow and often have a higher chance of being mispriced due to lower analyst coverage.
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1. Warren Buffett & Charlie Munger’s “Moat” Screener
Warren Buffett prioritizes companies with durable competitive advantages, and this screener attempts to find those stocks by filtering for companies with high returns on capital, growing revenue, strong gross margins, and low debt.
In true Buffett fashion, we’ve added a filter to show only stocks trading at less than 25x earnings, helping to filter for stocks trading at a “reasonable price.”
Why This Strategy Works
- Durable businesses win over time: Companies with wide moats can protect profits and market share for decades, making them more predictable and resilient.
- Proven track record: Buffett invested in high-quality businesses with moats to grow Berkshire Hathaway’s book value by over 20 percent annually for decades.
- Built to compound: High returns on capital and consistent cash flow allow these businesses to reinvest profits at high rates of return.
- Downside protection: These stocks tend to hold up better in recessions because of pricing power and customer loyalty.
- Low maintenance: It’s a long-term approach that doesn’t require constant monitoring or market timing.
Example Stocks: Google, Merck, Booking Holdings, Applied Materials, Lowe’s
Key Filters:
- Profitable companies
- ROIC greater than 20%
- Debt/Equity < 1
- Expected revenue growth and gross margin expansion over the next three years
- Forward P/E < 25
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2. Peter Lynch’s Growth at a Reasonable Price (GARP) Screener
This screener follows the Growth at a Reasonable Price (GARP) strategy popularized by Peter Lynch. Lynch liked to look for high-growth stocks with big expansion potential that were still trading at reasonable prices.
This screen can help you look for stocks that are seeing strong earnings growth that are still trading at a low P/E ratio.
Why This Strategy Works
- Best of both worlds: GARP combines the upside of growth investing with the downside protection of value investing.
- Real-world success: Lynch returned 29% annually with Fidelity’s Magellan Fund over 13 years, largely by following his growth-at-a-reasonable-price strategy.
- Under-the-radar opportunities: Wall Street often ignores These stocks because they’re not flashy, which creates mispricing.
- Smart valuation check: Lynch suggests looking for stocks where the annual earnings growth rate is higher than the P/E ratio. It’s a simple way for investors to spot growth stocks that might still be undervalued.
- Balanced risk-reward: Great for investors who want strong returns without taking on extreme volatility.
Example Stocks: Tencent, PDD, BYD Company, Allstate
Key Filters:
- 20% expected EPS growth
- 20% return on capital employed (ROCE)
- Forward P/E less than 20
3. Ben Graham’s Net-Net Screener
This is a deep value screener based on Ben Graham’s net-net strategy, which he introduced in The Intelligent Investor, a book that many consider to be the bible of value investing.
Graham, who was Warren Buffett’s mentor, pioneered this approach and used it to achieve some of the best returns of his career. Buffett himself saw outstanding results early in his career while managing small sums of money by following the same strategy.
Net-nets are stocks that have a market cap less than total current assets (cash, receivables, etc) minus total liabilities (total debt).
In other words, these stocks are incredibly cheap. However, they are usually not the highest-quality businesses, which isn’t necessarily a problem since they’re so cheap.
Net-net opportunities are rarer today than when Ben Graham invested in them, but investors can still find net-net ideas by looking globally.
Why This Strategy Works
- Extreme value: Net-nets trade below their net current asset value, meaning you’re buying real assets for substantially less than they’re worth.
- Legendary results: Graham and a young Warren Buffett saw some of their highest annualized returns using this approach.
- Asymmetric upside: You’re buying with a huge margin of safety, so even small improvements in the business can lead to big gains.
- Still works in niche areas: While rare today in the U.S., these opportunities still exist globally and in micro-cap markets.
- Perfect for patient investors: This style rewards those willing to go where others aren’t looking.
Key Filters:
- Net current asset value (current assets minus total liabilities) is less than 70% of the company’s market cap
- Revenue and EPS have grown over the last 3 years
- The business is not in biotechnology or capital markets (It’s typically best to stay away from Financials when net-net hunting because these can have trickier accounting policies to decipher.)
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4. Joel Greenblatt’s Magic Formula Screener
This screen was inspired by Joel Greenblatt’s The Little Book That Still Beats the Market.
In his book, Greenblatt explained that investors could beat the market by investing in companies with strong returns on capital and low valuations.
This screen is interesting for investors because it takes a formulaic approach to value investing by filtering for high-quality businesses that are undervalued by the market.
Why This Strategy Works
- Simple but powerful formula: The Magic Formula looks for companies that are both highly profitable and undervalued.
- Outperformed historically: Greenblatt’s research showed this strategy beat the market over a long-time period.
- Beginner-friendly: The Magic Formula is a clear, rules-based system that doesn’t require complex analysis. The formula selects the 30 US companies with the highest returns on capital and the lowest P/E ratios.
- Filters out low-quality stocks: By focusing on return on capital, it avoids businesses that are cheap for a reason.
- Consistency is key: Works best for investors who stick to it and avoid second-guessing.
Example Stocks: Schlumberger, First Solar, Assurant, Cal-Maine Foods
Key Filters:
- High Return on Capital (ROIC) (over 20%)
- Low Valuation (EV/EBIT) (less than 10x)
- Optional: US-Only (There are even more ideas if you search globally.)
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5. Cathie Wood’s Disruptive Innovators
This screen was based on Cathie Wood’s focus on disruptive innovators with high-growth potential.
Cathie Wood’s ARKK ETF has seen -1.7% annualized returns over the past 5 years after the fund became significantly overvalued in 2020 and the share price collapsed in 2021.
Despite the fund’s poor performance in recent years, investing in disruptive companies can be a great investing strategy for visionary investors, and this screen can help you find those kinds of stocks.
Why This Strategy Works
- Focus on the future: This strategy targets companies with disruption potential in their industries.
- Huge upside potential: While volatile, companies like Tesla that started small became 10x or even 100x winners.
- Misunderstood by the market: Many disruptive stocks are ignored or underestimated by traditional analysts, which creates opportunity for investors who do their own research.
- Room to grow: These companies are often early in their growth curves, which means they can benefit by growing in a massive market.
- Long-term bets: Best suited for investors with a long time horizon who believe in big technological shifts.
Example Stocks: Reddit, Rubrik, Affirm Holdings, Tempus AI
Key Filters:
- Revenue growth greater than 20% annually
- Research & Development expenses have grown over 10% annually over the last 3 years. This signifies that the business is investing in new technology, and is likely an innovator.
- Gross margins are > 40% and are expected to grow over the next 3 years.
- Optional: Under $20B market cap
- Optional: US-Only
FAQ Section:
What is a stock screener?
A stock screener is a tool that lets you filter stocks based on specific criteria like valuation, growth, profitability, or industry. It helps you quickly narrow down thousands of companies to a list that fits your investing strategy.
Why use stock screeners instead of just reading research?
Stock screeners save time by letting you focus only on companies that match your preferences. Instead of digging through dozens of stock reports, you can generate a personalized watchlist in seconds.
Can beginners use these screening strategies?
Yes. These screens are beginner-friendly and designed to reflect the strategies of successful investors. Even if you’re new to investing, starting with a proven framework gives you a helpful edge.
Are the stocks you find from stock screeners guaranteed to be good investments?
No tool can guarantee success, but stock screeners can drastically improve your process. They help you surface better ideas faster, but investors still need to sort through the bad ideas to find the good companies.
Which stock screener is the best?
It depends on your investing style. The Buffett & Munger screener is a great fit if you like quality and consistency. If you prefer innovation, the Cathie Wood-style screen may be more interesting for you.
TIKR Takeaway
Using stock screeners can help you find high-quality investment opportunities faster.
By applying the right filters, you can narrow down the market and focus on stocks that align with your investing strategy.
The TIKR Terminal offers industry-leading financial data on over 100,000 stocks, so if you’re looking to find the best stocks to buy for your portfolio, you’ll want to use TIKR!
TIKR offers institutional-quality research for investors who think of buying stocks as buying a piece of a business.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. We aim to provide informative and engaging analysis to help empower individuals to make their own investment decisions. Neither TIKR nor our authors hold any positions in the stocks mentioned in this article. Thank you for reading, and happy investing!
