September 10th, 2021

How to Find The Best Undervalued Investments Using Stock Screeners

Using tools like a stock screener can help improve your odds of success.

Are you a day trader or investor that is looking for ways to find the best investment? Using tools like a stock screener can help you understand how a stock market live chart works. It also helps improve your odds of success as you seek undervalued investments.

At, we provide retail investors and traders like you with tools that empower you throughout the process. With options like these, you'll be able to make investment discoveries that help you prosper.

Today, we'll discuss what a stock screener is and how it can benefit you. We'll also talk about ways on how to use one to find you the best-undervalued investments.

What Is A Stock Screener And How It Helps You When Using A Stock Market Live Chart?

Stock screeners are tools that help investors like you filter large sets of stocks into more manageable lists. This helps you qualify for much deeper analysis in a stock market live chart.

Here are some ways how these tools can help benefit you.

  • You'll be able to save time.
  • They help remove behavior biases and emotions from your investment decisions.
  • You'll be able to discover investments you may not have found out on your own.
  • They allow you to access the whole world with a few clicks.
  • You can save screens.

While you still need to do your own research, these tools will help guide you towards great investment opportunities.

Best Ways To Use A Stock Screener To Help You Discover Undervalued Investments

Knowing how to interpret a stock market live chart helps you be aware of the situation at hand. It's also important to know about the best methods to help you find undervalued investments that bring you top results.

Below are some great ways on how to make the best use of a stock screener. This will allow you to advance your cause in a big way.

Keep An Eye Out On The Price To Earnings Ratio

One of the most common indicators investors love to reference is the price-to-earnings ratio or P/E. The P/E Ratio measures a stock's market price in comparison to company earnings. This metric is great at helping you set guidelines on a stock's equity valuation. It also helps you evaluate how the market views a company's potential path towards growth.

Let's say you come across a company that has a lower P/E ratio than its competitors. This can mean that this company's stock is being undervalued.

While this may indicate a great buying opportunity, it's crucial that you not rely solely on the ratio. You'll also want to research why this company's stock has a low value. They could be facing situations such as declining earnings or low growth potential. This usually means that they're not undervalued and are trading at the correct value.

If you find no issues, you can then proceed to add this company to your list of potentially undervalued stocks.

Keep Track Of High Dividend Yields In A Stock

Another key indicator to look for in a stock market live chart is a stock's dividend yields. The dividend yield is the ratio of a company's dividend in comparison to its current share price. A great example of this is a stock that trades at $200 and has an annual yield of $4. This stock will end up having a dividend yield of 2%.

When it comes to dividend yields, look to compare them to the average industry yield. If the average yield is higher than that of a company, then that company's yield is low for that industry group. Now let's say that the situation was the opposite, then the company would be showing a high dividend yield.

Why High Dividend Yields Occur

It's always important to first find out why a company's dividend yield is high. It could be a result of a company facing tough times. This, in return, causes investors to avoid that stock in fear of declining future earnings. 

High dividend yields can also occur with companies with a great track record of solid earnings. This can indicate that their stock may be undervalued.  To ensure that this is the case, make sure to research the historical earnings of a company. By taking this step, you'll be able to make the best decision of whether to pursue a stock or not.

Check For Low Price-To-Earnings Growth (PEG) Ratio

The Price-To-Earnings Growth (PEG) Ratio is a great indicator that helps determine a company's growth potential. This ratio tends to be more accurate than just the P/E ratio on its own. When viewing the stock screener, divide the P/E ratio by the company's growth rate. This helps you find out what the PEG ratio of a stock is.

A great example of this is a stock with a P/E ratio of 20 and a growth rate of 25%. You would then get a PEG ratio of 0.8. If the PEG is less than 1, like in this example, this can mean that this stock is undervalued.

This can occur due to investors not noticing the high growth rate of a company. It can also mean that they're just simply ignoring it without any reason. Whatever the case, a stock with a high earnings growth rate can indicate strong future price potential.

See If The Market-To-Book (MTB) Ratio Is Low

The MTB Ratio is the total market capitalization of a company's stock divided by its shareholder equity. A low MTB ratio can mean the stock price is low in comparison to the company's net worth. In return, this can mean that there's an opportunity for an undervalued investment.

The key to interpreting the MTB ratio is to understand the real value of tangible assets. Here are three good examples of tangible assets to keep in mind.

  • Buildings
  • Cash
  • Land

It's also crucial to know how to interpret the real value of intangible assets such as intellectual property. For instance, a business that makes shoes may also own property. The property's value may be worth more than the shoe company itself. Many investors tend to overlook scenarios like these and focus too much on just revenue and profit growth.

What happens here is that the stock price doesn't reflect the root value of assets on this shoe company's books. For this reason, you always want to pay close attention to the underlying scenarios behind the MTB ratio. Taking these proactive steps will help you uncover stocks that may turn out to be undervalued investments.

Keep An Eye Out On Increasing Free Cash Flow (FCF)

When viewing the stock market live chart, you always want to pay close attention to the FCF metric. Free Cash Flow is the cash a company produces via its functions minus the cost of expenditures.

This metric shows how well a company does at bring in cash. It also helps you decide if a business has enough cash to pay shareholders via dividends and share buybacks.

What Should You Watch For When Viewing The FCF Metric On A Stock Screener?

The FCF metric is one that investors widely use for this key reason. It can help give them an early indication that earnings may grow down the road. This is possible since rising FCF usually comes before higher earnings. A company can have higher cash flows for three reasons.

  • Better cost reductions
  • Higher revenue
  • Increasing sales

With rising FCF and low share prices, investors like you will stand to benefit greatly. In other words, the prospects are good that earnings and share values will head up as well.

That's why it's paramount that you pay close attention to the FCF metric and track the company's performance. By taking this crucial step, you'll be able to reap the rewards in the end.

How Can Help Enhance Your Investment Strategies

At, we provide over 1 billion U.S. stock, ETF, crypto, options, and futures data points at any time. The best part is that they come with no delays and come from the world's most trusted industry providers. We provide these rich data points through many types of market tools to help empower your investing capabilities.

Our mission is to produce web and mobile apps that are easy to use and read. Not only that, but we use proprietary algorithms to integrate data points into fresh insights to guide your investment decisions.

What you'll also stand to gain is access to our daily stock games. With these options, you'll be able to test out strategies without risk for a chance to win cash prizes.

Looking to enhance your investment strategies? Then sign up for a free account today. You'll gain access to basic tools and purchase access to our top analytics tools.  By going this route, you'll achieve the best return on investment and be able to strive towards prosperity.

Finding Investments Using Stock Screeners