stock screening
The process of filtering stocks based on specific criteria — such as P/E ratio, dividend yield, or revenue growth — to identify investment candidates.
Example
“Her stock screen filtered 5,000 companies down to 30 by requiring P/E below 15, dividend yield above 3%, and positive free cash flow.”
Memory Tip
STOCK SCREENING = filter the universe of stocks using specific criteria. Find needles in the haystack.
Why It Matters
Stock screening helps individual investors save time by automatically filtering through thousands of companies to find those matching their investment goals. This process makes it easier to build a focused portfolio aligned with your financial objectives without manually researching every available stock.
Common Misconception
Many people believe that stock screening alone guarantees profitable investments, when in reality it only narrows down possibilities based on historical metrics. The stocks that pass your criteria filters still require thorough analysis and may not perform well in the future regardless of their past numbers.
In Practice
An investor might screen for large-cap stocks with P/E ratios below 15 and dividend yields above 2.5 percent. Out of 5000 available stocks, the screening process might identify 40 candidates that meet these criteria, which the investor can then analyze more carefully rather than evaluating all 5000 options.
Etymology
STOCK (equity shares) SCREENING (filtering through criteria). Filtering through STOCKS using a SCREEN of criteria.
Common Misspellings
Start investing with no commission trades
Related Terms
More in investing
Other investing terms you should know
See Also
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.