Investors know that investing in stocks can be a double-edged sword. The right investments can offer wealth, while the wrong investments will push your account into the red. It may sound harsh, but the reality is that stock investing is a long cycle of wins and losses. But what if I tell you that there is a tool that can help increase your odds of finding companies that fit your investment objective and optimizing your investment process? Then let me introduce to you the “Screener.”
What Is a Screener?
A screener allows investors to filter through a universe of stocks based on specific investment criteria. It helps automate the stock selection process and lets investors focus on companies that matter to the investor's investment process. For example, investors can use the screener to find stocks that fall under a certain market cap, a specific PE ratio range, or a certain dividend yield. Using a screener, investors can quickly narrow the universe of stocks to only the ones that matter, shaving off a lot of research time.
However, investors should never forget that one of the key things that make the stock selection successful is choosing criteria that fit their investment goals. What do I mean by that? Investors should determine whether they want growth, value, or dividend-paying stocks. Investors can also look for trending stocks, reversals, breakouts, or technical indicator-based criteria for short-term trading. If it's for a particular sector or global, investors can screen for it too. Understanding the investment goals will help investors narrow their search criteria using a stock screener.
Where To Find the Screener?
The screener is part of the toolset investors can use on Barchart: Go to the “Tools” section and choose “Screener.”
This will open the “Stock Screener” that lets you start building your investment criteria and potentially find companies to invest in.
Let’s try a volume-based stock screener by focusing on finding companies that have been showing signs of:
- Significant volume gains,
- have a trading increasing volume, and
- with a trading volume of at least 50,000.
This first set of volume filters lets investors find companies trading significantly higher in volume in the last five days from their 20 and 100-day volume averages and a minimum traded value so that investors will only get companies with significant trading participation.
Now that the volume criteria are set, let’s only focus on bullish companies by using the moving average filters (5-day moving average is greater than the 20-day moving average), positive increase in prices (ensure that yesterday’s close is a positive close), and a 1-month performance of at least 5% and a performance cap of 5-20% to remove outliers in 1-day performance.
The Results
Now that the results are in, investors can sort them based on some of the criteria I used. Let’s start by looking at the top 3 traded stocks in the list.
Borqs Technologies Inc. (BRQS)
Borqs Technologies Inc (formerly Pacific Special Acquisition Corp.) is a China-based company focused on software, development services, and products. The company is focused on providing its customers with scalable, customizable, and differentiated Android-based smart connected devices and various cloud service solutions.
BRQS has just traded with significant volume and a 1-day return. Prices have appeared to have found a bottom since February with occasional tests on the 50 simple moving average (red line). RSI is also in bullish territory, which signifies a potential follow-through. Investors planning to buy into BRQS should exercise proper risk management to ensure that if the market proves them wrong, it is still a justified amount of risk for the potential reward.
Microcloud Hologram Inc. (HOLO)
MicroCloud Hologram Inc. is a holographic digitalization technology service provider in China focused on providing holographic technology services globally. The company's operations are focused on Holographic solutions and Holographic technology services that include holographic light detection and ranging (LiDAR) solutions, holographic LiDAR, and holographic advanced driver assistance systems (ADAS).
HOLO prices have tried to break out of their tight range but were met with large sellers on their way to test its 100-day moving average(green line). RSI is also in bullish territory after its increased activity in the last 3 days. Investors willing to buy into HOLO should research the company profile, financials, and prospects to ensure that any investment they make is an informed decision that aligns with their investment goals.
Dangers of Using a Screener Alone
A screener is a powerful tool that can help investors focus on companies that matter to their investment or trading strategy. The beauty of the screener is its flexibility and ability to remove bias by only focusing on qualities that investors have proven to be effective in their investment objective. However, investors should never forget the screeners' limitations, as it depends on the investor's input. As the adage goes, "A sword is only as deadly as the hand that wields it." Case in point - the top result in the list is: First Republic Bank (FRC), a commercial bank and trust company specializing in providing services that include private banking, real estate lending, private business banking, wealth management services, and trust and custody services. Its main focus of operation is Commercial Banking and Wealth Management.
FRC has been one of the banks that suffered greatly in the recent banking crash from SVB and others. However, as fears have started dying down, prices are picking up, and volume shows investors slowly getting back into FRC.
That said, investors must still remember to conduct due diligence and employ proper risk management to be safe if the market proves them wrong. In this case, FRC is dropping 22% in premarket trading. With that in mind… the only question is, which side of the trade do you want to be on?
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
