How to Find Undervalued Stocks Using a Stock Screener in 2024?

In 2024, finding undervalued stocks is still a key strategy for smart investors looking to maximize their returns. One of the most efficient tools to help with this is a stock screener. By setting up the right filters, you can quickly identify stocks that are trading below their true value, based on fundamental indicators. Here’s a simple guide on how to use a stock screener to find undervalued stocks.

Set Price-to-Earnings (P/E) Ratio Filters

The P/E ratio is a popular metric for identifying undervalued stocks. It compares a company’s stock price to its earnings per share (EPS). A lower P/E ratio compared to the industry average often signals that the stock is undervalued.

• Filter to Use: Set your screener to find stocks with a P/E ratio below the sector or market average.

Include Price-to-Book (P/B) Ratio

The P/B ratio compares a company's market value to its book value. A P/B ratio under 1 can indicate that the stock is undervalued, as the market is pricing the company at less than its actual assets.

• Filter to Use: Look for stocks with a P/B ratio below 1 or lower than their peers.

Search for High Dividend Yields

A high dividend yield relative to the stock price can be a sign of undervaluation, especially if the company is stable. A stock with a strong dividend history may be underpriced if the yield is higher than usual.

• Filter to Use: Set the dividend yield filter to show stocks with a higher-than-average yield for their sector.

Consider Debt-to-Equity (D/E) Ratio

The D/E ratio helps assess a company's financial health. A low D/E ratio suggests that the company isn't heavily reliant on debt, making it a potentially undervalued, safer investment.

• Filter to Use: Set the D/E ratio to show companies with a low ratio compared to their sector.

Add Earnings Growth and Analyst Ratings

Earnings growth is a key indicator of a company's future potential. Stocks with strong earnings growth but relatively low market valuation are often undervalued. Positive analyst ratings can also be a clue that a stock is underpriced.

• Filter to Use: Look for stocks with strong earnings growth and favorable analyst ratings.

Conclusion

Using a stock screener in 2024 to find undervalued stocks is a strategic approach for investors. By filtering based on P/E, P/B ratios, dividend yield, D/E ratio, and earnings growth, you can quickly identify stocks that are trading below their true value. Start your search with these filters to build a portfolio of undervalued stocks with great long-term potential.