14 April 2011

How to perform a stock screening?

Malaysia and Singapore shares market have list of thousands of shares. Many investors have problems of reading through all the annual reports. As result of that, we have limited time to check on all the listed companies. One of the techniques we can do is perform a stock screening. Below is my way of performing stock screening:

  1. ROE: more than 15%. Which means the company is possible to achieve 15% growth in earnings per annum if all the earnings are accumulated without distributed to investors as a form of cash dividend. In other word, it is ability of company to achieve growth without needs of additional debt borrowing/additional shares issue.
  2. P/E: less than 10. Price Per Earnings ratio here means number of years you can get back your investments. Normally the lower the PE, the better the investment. Studies show that Low PE can give you a better returns in long run. Of course, we have to be aware of management manipulation of financial statement.
  3. 5 year average CAGR: more than 10. A compound annual growth rate of more than 10% can give you a decent return if you can hold it for long term. However please take note that passed performance may not be the indicator for future performance. However, we can find out why such company can achieve this result after we performing the stock screening.
  4. Dividend Yield > risk free rate: this can give you a protection when share markets collapse. The lower the share price, the higher the dividend yield is. And it can stands as part of your passive income.

Of course, after the stock screening, we will list out top 100 companies and then read through the annual reports and related information. Please be noticed that this stock screening is just one of the method for finding out potential stocks. You will gain more experience by practicing in the shares market.

Good luck.


  1. There is a stock screener that combines fundamental with analyst expectations as well as technical which is quite suitable for retailers. You can request for a one month trial too.


  2. Hi JC, not only that, certain brokers are also offering the free stock screener.
    For those who is interested in this, you may ask online brokers whether they have such services to you. It can make your life easier. :)

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