Discover new investment opportunities

Create: 2022-06-20
Update: 2022-06-29
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Find out how to use the screener and discovery

Discover new investment opportunities

In this email you'll learn how to slice and dice your way through tens of thousands of stocks to focus your efforts on the best ideas.


Thanks again for choosing Simply Wall St to be your trusted tool for stock market news, research and advanced modelling.


In part one of our series, we walked you through what it takes to research a stock. 


In this short email, we'll show you how to get started finding good ideas to begin your next round of research. While researching a company might sound like it's the most important part of your process, by using the steps that we outline in this email you will save the most time and effort.


What is Stock Screening?

To understand why stock screening/filtering is important, you need to know that the most important asset any investor or analyst has is time. If you spend 20 hours researching a company only to find that it's not what you want, it can be very frustrating.


Stock screening is the act of narrowing a list of stocks/companies using rules to include opportunities that are what you want to see. Then, using a more manageable list, you can do your in-depth research.

Think about it like this: with only 24 hours in one day, there's no way anyone could research all 100,000 stocks covered on our platform.

Here's how you can start screening stocks


Using the Simply Wall St platform, in just a few clicks, anyone on our Investor Plan or above can sort through any number of stocks to narrow it down to just a few.

For example, in the United States, there are nearly 10,000 stocks. That's too many for any one investor to manage and research.

However, let's say you want to focus your effort to only the major exchanges (NYSE, NASDAQ, etc.), and you would like to invest in software stocks. Here's how that screen would look:

Tip: What you want to see here is a record of strong growth. Think about it like this -- if the company has grown its earnings/profit at 10%, 20% or more (per year) that's a strong sign that the business model is working.

When we ran the screen on Simply Wall St we got a list of ~137 stocks. You're probably thinking to yourself, 'a list of 137 stocks is still too long for me to research thoroughly'. We agree.

Now let's say you want to be even more focused with your research effort.

Going back to our screen above we'll add another filter: forecast growth. That is, companies which are forecast to grow their profits/earnings between 10% and 25% per year for the next three years:

By adding this growth filter, our list of 10,000 US stocks has now fallen to around 30. That's much better!


The investing secret behind good stock filtering


Oftentimes, when an investor first uses our Screener tool they are blown away with how powerful it can be.

The first thing they tend to do is try to narrow down companies to be 'exactly what I want'. However, Charlie Munger, the famous investor and partner of Warren Buffett, has shared many fantastic investing experiences and insights over his lifetime. And one of the secrets to investing success, we think, can be boiled down to this quote from Mr Munger:

Meaning, Charlie says one of the best things to do when investing is not to focus solely on the returns but focus on what could go wrong and avoid those risks.

In other words, stock filtering could be a great tool for narrowing down new opportunities, however, it can be equally powerful for avoiding the companies you don't want to own.

For example, let's return to our filter of US stocks from above. This time, let's say you don't want to own any stocks with a debt-to-equity ratio (D/E) over 100% because, typically, the more debt a company has, the riskier it is. Put another way, you want every company on your list to have a D/E ratio between 0% and 100%.

The result? Our list of 30 companies is down to just 24 when we avoid companies with lots of debt.

Check out the Screener

Tip: If you want to invest your research time and effort like Charlie Munger, think about using our Screening tool to find the companies you want and avoid the companies you don't.


Explore our Collections


Looking for some inspiration? It can be hard coming up with your own investment thesis and finding interesting companies. 


Explore the various collections below in our Discover section.


Using our Discover tool, shown above, you can leverage all of our pre-built stock filters and, with just a few clicks, see all of the companies on each list. That's 100,000 stocks… screened in seconds!


Connecting your stock Screen to your research process


Now that you know how to easily screen for what you want (or don't want) in an investment, what's next?

The answer: the Simply Wall St Snowflake.

Our Snowflake, such as the one shown here to the right, is the highest level financial 'summary' of a stock you could ask for.

Instantly, the Snowflake provides an update on the 36 key metrics for any company in a simple, easy-to-follow visual. It evaluates a company using quantitative analysis of the company's fundamental data.

For example, this Snowflake shows a company that scores highly for past results, financial health and dividends. However, this example company doesn't score as highly for valuation.


How to use the Snowflake


The Snowflake is not a recommendation or a trading signal. It's an easy-to-follow summary when you want to get a financial snapshot of a company.

So, for every stock in your Screener, you could observe the Snowflake and use that information to tell you which company to research first. The Snowflake connects our Screener to your in-depth research effort, which we covered in the first email.

Let's take a moment to consider what you know about investing in stocks, so far, with Simply Wall St by your side. You can:

  1. Screen 100,000 stocks for important fundamental data. Check.
  2. Use the pre-built Discover tool. Check.
  3. Quickly research a stock for further analysis. Check.

In the next email, we'll show you the easiest way to keep track of all of your investments, identify risks and keep on top of your positions.

While you wait, why not jump onto the Simply Wall St platform and try making your own Stock Screen?

Make my own Stock Screen

Invest Well,
Simply Wall St

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Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this email/website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us.

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