Advanced Screening Rules

Basic stock screening, which we introduced in the previous article, is a quick and easy way to filter down the thousands of stocks in the market to a manageable number of candidates.

But the Stockopedia Screener also offers much a much higher level of finesse and customisation. In this short 5 minute piece you’ll learn all about our variety of advanced screening rules.

Rule Types

  • Simple Rules
    • Simple ratio rules
    • Ratio vs Ratio rules
  • Aggregates Rules
    • Ratio Rankings
    • Ratio Averages
  • Classification Rules
    • Sectors & Industries
    • Style / Risk / Size
    • Indices
    • Markets & Exchanges
    • Primary listings

Each of these rule types is selected using the dropdown menu when clicking “Add a new rule” which you can see at the bottom left of the form.

Simple Rules

Firstly we’ll look at some simple rules.

Basic Rules

The most basic rule type simply allows you to choose a ratio or metric and comparing it with a value. We won’t go into this in any more depth as we extensively covered it in the previous article.

Ratio vs. Ratio rules

The second option is the Ratio vs. Ratio option. pThis allows you to compare a ratio versus a multiple of another ratio. You can be as creative as you want here… but as an example we can try to search for reasonably priced growth stocks… where the P/E ratio is less than half of the EPS Growth rate.

Aggregate Rules

The next set of rules in the “Add a Rule” menu are the ‘_aggregate_’ rule types. They compare a stock ratio against either its ranking vs a universe of stocks or the average of a universe of stocks. Let’s look at rankings first.

Ratio Rankings

This rule allows you to search for stocks with the best or worst ranking for any ratio against all the stocks in your subscription universe.

So we can select a metric or ratio and compare how it ranks against its sector or industry or the market as a whole.

We standardise these ranking metrics as percentiles from 0 (worst) to 100 (best). So 100 can be thought of as fastest growth, cheapest valuation, highest profitability etc with zero as the opposite.

You can look for stocks with a percentage ranking position that’s ‘Equal to’, ‘Greater than’ or ‘Less than’ whatever value you choose.

You can refine Ratio Rankings even further by creating complimentary rules. For instance, when searching for high, but not excessive dividend yields, you might look for companies with yields that are ‘Greater than’ 80% of the market but ‘Less than’ 90%. That would give you a 10% band towards the top of the market to investigate further.

Ratio Averages

The next Rule set allows you to find stocks whose metrics rate either above or below the market, sector or industry averages.

As you can see from the dropdown menus can either choose to screen using the sector or market medians or mean averages. It is worth understanding that mean ratios can be highly skewed for financial data due to the presence of outliers.

We do winsorize distributions at the 3% level when calculating means, but still means can be skewed. We prefer to use medians in-house as they are more appropriate for many of the mid cap and small cap stocks that many private investors prefer to hunt in.

Classification Rules

The third set of rule types allow you to narrow your search by using the classification of a stock either against a sector or industry, index like the S&P500 or by stock exchanges on which it may or may not listed.

Sectors & Industries

The Sectors & Industries rule type allows you to further narrow the selection of stocks by their business type. It is well worth reading up about our hierarchical sector and industry classification.

There are 10 economic sectors and 54 industry groups available on Stockopedia - so choosing whether to screen by sector or industry is the first decision. Let’s filter by sector.

You can then either choose to include or exclude a set of sectors_._ Once you’ve made this decision you then choose from the dropdown menu which sectors you’d like to include or exclude from your search. For example many investors like to exclude Financials from stock screens.

StockRank Style, Risk and Size Group

The ”Style / Risk / Size rule type allows easy screening using our triad of proprietary classification filters - The Risk Rating, Size Groups, and StockRank Styles. Add the rule, then select from the first dropdown to choose which classification you wish to use. Each then offers a variety of options to include or exclude depending on type.

Whether you are looking for Speculative Small Cap Value Traps, or Conservative Large Cap High Flyers, these filters make searching the market a breeze.

Index Constituency

The Add a rule menu offers the option to select Index Constituency. In the same way as for sectors & industries this simple rule makes it possible to include or exclude specific market indices.

In the UK there are a range of indices to choose from, including the FTSE 100, FTSE 250, FTSE SmallCap, the Alternative Investment Market (AIM) and Techmark, among others, while there are a growing range of international indices from the S&P500 to the FTSEurofirst 300.

Markets & Exchanges

The final option on the Add a rule menu is Markets & Exchanges. It offers the same include / exclude options as the previous 2 rule types.

The International option allows users to differentiate and select multiple international stock exchanges from the LSE to the NYSE. Some countries (like the US, UK or Germany) have lots of stock exchanges so be sure to add or remove them all if that’s your choice.

There is another special option for UK users which allows the option to differentiate between segments of the London Stock Exchange (like the AIM) and the ICAP Securities & Derivatives Exchange.

Including or excluding dual-listed stocks

Generally, dual-listed stocks create a fair amount of ‘noise’ in screening results. These are stocks which trade on the local stock market but whose primary listing is abroad. Many investors choose to exclude them from searches because liquidity can be poor. By default Stockopedia’s custom screens exclude dual- listed stocks.

Of course some very large and famous stocks can be dual listed (like Unilever in the UK) so some investors wish to include them. You can include dual listed stocks by clicking the ‘cog’ icon next to the submit button in the custom screening form.

This will open a settings panel in which you’ll see a checkbox ticked and titled “Exclude Dual Listed Stocks”. By unchecking this checkbox you will include dual listed stocks in your results.

You can see which stocks are dual listed and which are not by adding the "Is Primary Listing" field into your table view using the Table Editor. This prints a tick or cross next to each name in the list. Very handy!

Do remember that If you want to get to know which metrics are available to screen by you can explore our extensive ratio glossary which you can read online or print off.