Investing in stocks requires a systematic approach to identify companies with strong financials and potential for future growth. One way to filter stocks is by using Screener.in, a popular stock screening tool. In this post, we will go step by step to understand a stock screening script that helps find undervalued, financially strong companies. This is beginner-friendly, so even if you are new to stock investing, you’ll be able to follow along.
1. Understanding the Stock Screener Script
Here’s a simple screening script you can use in Screener.in:
Down from 52w high > 50 AND
Market Capitalization > 10000 AND
Debt to equity < 1 AND Return on equity > 15 AND
Return on assets > 5 AND
Current price < Intrinsic Value AND
Price to Earning < Industry PE
This script applies 7 key filters to find undervalued, financially strong stocks that have fallen significantly from their 52-week high. Let’s break it down step by step.
2. Down from 52-Week High > 50
What it means:
- This filter selects stocks that have fallen more than 50% from their 52-week high price.
- It helps identify stocks that might be undervalued due to temporary market corrections or negative sentiment.
Why it matters:
- Some stocks fall due to panic selling, temporary business challenges, or overall market corrections.
- This filter allows us to look for potential recovery opportunities.
- However, we must investigate why the stock has fallen—some companies drop due to serious business problems.
3. Market Capitalization > 10,000 Crore
What it means:
- Market Capitalization (Market Cap) = Share Price × Number of Outstanding Shares.
- This filter selects companies whose market cap is greater than ₹10,000 crore.
- It removes small-cap companies and focuses on mid-cap and large-cap stocks.
Why it matters:
- Large-cap and mid-cap stocks are more stable and less volatile than small-cap stocks.
- They generally have better liquidity (easy to buy and sell).
- Companies in this category tend to have strong financials and proven business models.
4. Debt to Equity < 1
What it means:
- Debt-to-Equity (D/E) ratio = Total Debt / Shareholders’ Equity.
- This filter selects companies where D/E is less than 1, meaning the company has more equity than debt.
Why it matters:
- Low debt indicates financial stability and lower risk.
- Companies with too much debt may struggle to repay loans during economic downturns.
- Debt should be manageable, and the company should generate enough profits to cover interest payments.
5. Return on Equity (ROE) > 15
What it means:
- Return on Equity (ROE) = Net Profit / Shareholder’s Equity × 100.
- This filter selects stocks with higher ROE than 15%, meaning the company is highly profitable.
Why it matters:
- A high ROE shows that the company efficiently generates profits with the shareholders’ money.
- It indicates good management and strong business performance.
6. Return on Assets (ROA) > 5
What it means:
- Return on Assets (ROA) = Net Profit / Total Assets × 100.
- This filter selects companies with ROA > 5%, meaning they efficiently use their assets to generate profit.
Why it matters:
- Companies with a higher ROA are efficient in utilizing their assets.
- A company with a low ROA might have large assets but is not generating enough profit.
7. Current Price < Intrinsic Value
What it means:
- This filter selects stocks where the current price is lower than the estimated intrinsic value.
- Intrinsic value is the stock’s true worth based on future cash flows, assets, and business potential.
Why it matters:
- Buying stocks below their intrinsic value means you are getting a bargain.
- This is a key principle of value investing, followed by investors like Warren Buffett.
- You should calculate intrinsic value using DCF (Discounted Cash Flow) models or other valuation methods.
8. Price to Earnings (P/E) < Industry P/E
What it means:
- Price-to-Earnings (P/E) Ratio = Stock Price / Earnings per Share (EPS).
- This filter selects stocks where P/E is lower than the industry average.
Why it matters:
- If a stock has a lower P/E ratio than its industry peers, it may be undervalued.
- Investors often compare P/E ratios within an industry to understand if a stock is cheap or expensive.
Final Thoughts: How This Screener Helps Investors
By using this Screener.in script, you can find stocks that are: ✅ Undervalued (Low P/E, trading below intrinsic value) ✅ Financially strong (High ROE, High ROA, Low Debt) ✅ Large/Mid-Cap companies (Market cap > ₹10,000 crore) ✅ Potential recovery candidates (Down > 50% from 52-week high)
This is a great way to start researching investment opportunities, but remember: 🔹 Always analyze company fundamentals beyond screener results. 🔹 Check why a stock has fallen—don’t just buy because it looks cheap. 🔹 Read annual reports, news, and management discussions before investing.
Happy Investing! 🚀
Would you like help tweaking this screener for your personal investment strategy? Let me know in the comments!
