How to Find Small-Cap Stocks With A Stock Screener?

To find small-cap stocks using a stock screener, you can start by setting the market capitalization filter to focus on companies with a market capitalization below a certain threshold. Small-cap stocks typically have a market capitalization between $300 million and $2 billion, although this can vary depending on the screener you are using.

Additionally, you may want to use other filters such as the price-to-earnings ratio (P/E ratio), revenue growth rate, earnings growth rate, and other financial metrics to narrow down the list of small-cap stocks that meet your specific criteria.

Once you have identified a list of potential small-cap stocks using the stock screener, it's important to conduct further research on each company to assess their financial health, growth potential, industry trends, and overall investment attractiveness. This can involve analyzing financial statements, reading company news and analyst reports, and monitoring market trends.

Keep in mind that investing in small-cap stocks can be riskier than investing in larger, more established companies, so it's important to do your due diligence and consider consulting with a financial advisor before making any investment decisions.

How to adjust search parameters on a stock screener to find more small-cap stocks?

To adjust search parameters on a stock screener to find more small-cap stocks, you can follow these steps:

1. Start by setting the market capitalization filter to target smaller companies. Typically, small-cap stocks have a market capitalization between $300 million and $2 billion.
2. Adjust the price per share filter to target lower-priced stocks, as small-cap stocks tend to have lower share prices compared to larger companies.
3. Use the sector or industry filter to focus on specific sectors that are more likely to have small-cap companies. For example, technology, healthcare, and consumer discretionary sectors tend to have a higher concentration of small-cap stocks.
4. Narrow down the search criteria further by looking at other fundamental factors such as revenue growth, earnings growth, and profitability, as small-cap stocks may have different growth profiles compared to larger companies.
5. Consider adding liquidity criteria such as average daily trading volume or bid-ask spreads to ensure that the stocks you are screening for are actively traded.

By adjusting these search parameters on a stock screener, you can focus your search on small-cap stocks that may offer growth potential and diversification opportunities for your investment portfolio.

How to backtest the performance of small-cap stocks identified with a stock screener?

1. Select a stock screener: Choose a stock screener that allows you to filter for small-cap stocks based on specific criteria such as market capitalization, earnings growth, and valuation metrics.
2. Identify small-cap stocks: Use the stock screener to generate a list of small-cap stocks that meet your criteria. This list will serve as the universe of stocks to backtest.
3. Select a historical time period: Decide on a specific time period for the backtest, such as the past 1 year, 3 years, or 5 years. The longer the time period, the more reliable the backtest results will be.
4. Develop a trading strategy: Define a trading strategy that you will use to backtest the performance of the small-cap stocks. This could involve buying and holding the stocks for a certain period, trading based on technical indicators, or implementing a momentum or value investing strategy.
5. Backtest the stocks: Using historical stock price data, track the performance of the small-cap stocks in your list over the selected time period based on your trading strategy. Record the returns and compare them to a benchmark index such as the S&P SmallCap 600 or Russell 2000.
6. Analyze the results: Evaluate the performance of the small-cap stocks identified by the stock screener compared to the benchmark index. Assess factors such as return, volatility, drawdown, and Sharpe ratio to determine the effectiveness of the stock screener in identifying promising small-cap stocks.
7. Refine the strategy: Based on the backtest results, make adjustments to your trading strategy and criteria for selecting small-cap stocks. Continuously refine and improve your approach to increase the likelihood of success in identifying and trading small-cap stocks.

What is the difference between large-cap and small-cap stocks when using a stock screener?

When using a stock screener, the main difference between large-cap and small-cap stocks is typically in the market capitalization criteria that is used to filter and search for stocks.

Large-cap stocks are generally classified as companies with a market capitalization of over $10 billion. These are typically well-established, financially stable companies that are household names and have a long history of strong performance. When using a stock screener, investors looking for large-cap stocks will filter their search based on market capitalization criteria above a certain threshold, typically $10 billion or more.

On the other hand, small-cap stocks are classified as companies with a market capitalization below $2 billion. These are typically newer, smaller companies that are still in the growth stage of their lifecycle. When using a stock screener, investors looking for small-cap stocks will filter their search based on market capitalization criteria below a certain threshold, typically $2 billion or less.

By using these market capitalization criteria in a stock screener, investors can easily differentiate between large-cap and small-cap stocks and select stocks that meet their specific investment criteria based on company size and growth potential.

What are some common misconceptions about using stock screeners for small-cap stocks?

1. Stock screeners only work for large-cap stocks: While it is true that some stock screeners may focus primarily on large-cap stocks, there are also many screeners available that cater specifically to small-cap stocks. It is important to do your research and choose a stock screener that fits your needs.
2. Stock screeners guarantee success: Stock screeners are tools that can help investors identify potential investment opportunities, but they do not guarantee success. It is important to conduct thorough research, consider other factors, and assess market conditions before making investment decisions.
3. Stock screeners are only useful for active traders: While active traders may benefit from using stock screeners to identify short-term opportunities, long-term investors can also use screeners to find undervalued small-cap stocks with growth potential.
4. Stock screeners are complicated to use: Stock screeners come in a variety of formats and levels of complexity. Some screeners have user-friendly interfaces and customizable filters that make them easy to use, even for beginners. It is important to choose a screener that is suitable for your level of experience and goals.
5. Stock screeners are expensive: While some advanced stock screeners may come with a price tag, there are also many free or affordable options available that offer valuable features for analyzing small-cap stocks. It is important to compare different screeners and choose one that fits your budget and needs.

How to compare different stock screeners for finding small-cap stocks?

1. Features: Look at the features and tools offered by each stock screener. Some screeners may have advanced filtering options, customizable layouts, and real-time data that others do not offer.
2. Coverage: Check the coverage of small-cap stocks in each stock screener. Some screeners may have a wider range of small-cap stocks available for screening, while others may be limited in their selection.
3. User Interface: Consider the user interface of the stock screener. A user-friendly interface with easy navigation and customization options can make it easier to find small-cap stocks that meet your criteria.
4. Customization: Look for stock screeners that allow for customization of search criteria and filters. This will enable you to narrow down your search and focus on specific small-cap stocks that match your investment goals.
5. Customer reviews: Read reviews and feedback from other users to get a sense of their experiences with different stock screeners. This can help you understand the strengths and weaknesses of each screener when it comes to finding small-cap stocks.
6. Pricing: Consider the pricing of the stock screener. Some screeners may be free to use, while others may require a subscription or one-time payment. Evaluate if the features and coverage provided justify the cost for your investment needs.

How to continuously refine your screening criteria for finding small-cap stocks with a stock screener?

1. Evaluate your current screening criteria: Take a look at the screening criteria you are currently using to identify small-cap stocks. Are there any criteria that are not providing useful results or are too broad or too narrow? Make note of any adjustments that need to be made.
2. Research industry trends: Stay informed about the latest trends in industries that are known for producing successful small-cap stocks. This will allow you to adjust your screening criteria to better reflect the current market environment.
3. Monitor the performance of your past picks: Keep track of how the small-cap stocks you have selected in the past have performed over time. This will give you an indication of which criteria are working well and which may need to be refined.
4. Stay up to date on financial news: Pay attention to financial news and market updates to identify any new factors that could impact the performance of small-cap stocks. This information can help you adjust your screening criteria to better capture opportunities for growth.
5. Seek advice from financial experts: Consult with financial experts or investment professionals to get their insights on how to refine your screening criteria. They may provide valuable feedback and recommendations for improving your stock screening process.
6. Test new criteria: Experiment with adding new screening criteria to your process to see if they yield better results. This could involve factors such as revenue growth rates, profitability metrics, or valuation ratios.
7. Review and refine regularly: Make it a habit to regularly review and refine your screening criteria based on new information and insights. This will ensure that your process remains effective and up to date in identifying promising small-cap stocks.