Mastering the Stock Filtering Process: How to Find Top Stocks in Minutes

Finding the right stock can often feel like searching for a needle in a haystack. With over 10,000 stocks in the market, knowing which ones to focus on can be overwhelming. In the latest episode of Trade Smart Tuesday, I delve into the essential process of stock filtering, showing how to narrow down a vast universe of stocks into a manageable list of high-potential picks. Here are the top 10 highlights from the discussion.

1. The Importance of a Solid Filtering Process

A robust filtering process is essential to identify the best stocks. Without it, traders can easily get lost in the vast sea of options. A good filtering process saves time and enhances decision-making. My process narrows down the market from over 10,000 stocks to a much smaller, more manageable list, allowing for focused analysis and better trading decisions.

2. From 10,000 to a Manageable List

I filter over 10,000 stocks down to the top 3.5%—a list of about 350 stocks. This initial filtering is crucial for focusing on stocks with the highest potential. Using a series of criteria, I reduce the overwhelming number of stocks to a more focused universe list, ensuring I only spend time analyzing stocks with real promise.

3. Super Earnings Growth Filter

One of the primary filters I use is for super earnings growth. This involves looking for stocks with an earnings percentage change per quarter of 50% or greater and accelerating EPS for the last three quarters. This criterion helps identify companies with strong growth momentum. I got this idea from William O’Neill, who emphasized looking for extraordinary earnings and sales growth in his book, “How to Make Money in Stocks.”

4. Super Sales Growth Filter

Similar to the earnings growth filter, I use a sales growth filter. I look for companies with significant sales growth, ensuring they have the revenue to back up their earnings. This includes criteria like sales percentage change per quarter and a minimum price threshold to ensure liquidity. I also look at the composite rating, which takes into account multiple factors to rank stocks in the top 90% of the market.

5. The Rocket Scan

The Rocket Scan filter is designed to find high momentum stocks. I look for stocks that have moved over 100% in just three months and then consolidated no more than 40%. This captures stocks with strong upward momentum and the potential for further gains. My Rocket Scan incorporates principles from market wizards like William O’Neill and Mark Minervini, ensuring I capture stocks poised for explosive growth.

6. Using Market Surge for Screening

I demonstrate how I use Market Surge to run my filters. This tool helps me quickly narrow down the market to a select few stocks that meet my stringent criteria. The criteria can also be applied to other screeners like DeepVue. By using Market Surge, I can efficiently manage my time and focus on the most promising stocks.

7. The Universe List

Once the initial screening is done, I compile a universe list of about 350 stocks. I manually go through this list to identify the top picks, which further reduces the number to just a handful that I will consider trading. This step is crucial as it allows me to apply my personal judgment and experience to refine the list further.

8. Criteria for Adding Stocks to the Universe List

Here are some tips for adding stocks to the universe list, including ensuring adequate average daily volume and a minimum price of $5. This helps maintain liquidity and institutional interest in the stocks. Stocks with higher liquidity and price stability are more likely to attract institutional investors, adding an extra layer of validation to my picks.

9. Practical Tips for Effective Filtering

Here are some key tips for effective stock filtering:

  • Keep It Simple: Avoid overly complex criteria to ensure some stocks pass the filters. Too many criteria can result in zero stocks passing the filter, which defeats the purpose.
  • Semi-Automatic Process: Use screening tools to automate part of the process, saving time and effort. Tools like Market Surge help streamline the initial screening.
  • Practice Consistency: Regularly practice running screens to gain market insights and improve filtering skills. Consistent practice helps me stay in tune with market trends and refine my strategies.

10. Join the Research Program for Detailed Analysis

I invite you to join my research program, offering a free two-week trial. The program provides filtered results, detailed analysis, full trading plans, and daily video explanations. This resource is invaluable for traders looking to refine their strategies and make informed decisions.

Watch the Full Episode and Join the Free Trial

For a more in-depth understanding and to see these strategies in action, watch the full episode of Trade Smart Tuesday here.

To get detailed analysis, filtered results, and my full trading plan, join the free two-week trial of our research program.

Conclusion

Filtering top stocks from a massive list can be daunting, but with a solid process and the right tools, it becomes manageable. By following these strategies and tips, you can significantly enhance your stock-picking skills and increase your chances of success in the market. Don’t miss out on these valuable insights—watch the full episode and start your free trial today!

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