How to Choose a Stock Based on Criteria
Choosing a stock can be very difficult, especially if you're not familiar with the terminology or the criteria professional investment and fund managers use to purchase stock. The Internet is a source of many useful tools that can help you find stocks based on criteria ranging from market capitalization to industry to growth rate to stock price. The challenge is determining which criteria to use in order to choose the best stock.
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Instructions
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Go to Yahoo! Finance's Stock Screener. Yahoo! Finance is rated as the most popular investment research site on the web. See Resources for a link to the screener.
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Select an industry. There are numerous industries to choose from; it depends on what you're looking for. If you're not concerned with industry, select "Any."
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Select share data criteria. This part of the screen allows you to select stocks based on share price, market capitalization (size), dividend yield, and beta (volatility).
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Select sales and profitability levels. The next section of the screen allows you to select stocks based on profitability criteria. This includes sales revenue and profit margin.
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Select stock based on valuation criteria. Valuation ratios range from price/earnings ratio, price/book ratio, and price/sales ratio. Each of these tells you how under- or overvalued a company is, but only when compared to other companies in the same industry.
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Click "Find Stocks." The screen will return a basket of stocks which match your criteria.
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