Stock Screener Guide

Complete practical guide to using Parallax's advanced stock screener for systematic opportunity discovery and factor-based investing

Master systematic opportunity discovery. This comprehensive guide teaches you how to use Parallax's advanced stock screener effectively, from basic filtering to sophisticated institutional-grade screening strategies.

The screener combines traditional fundamental analysis with proprietary factor scoring, enabling you to discover investment opportunities that align with your specific investment philosophy and risk parameters.

Getting Started with Stock Screening

Understanding the Screener Interface

Filter Panel (Left Side):

  • Basic Filters: Market cap, sector, geography, price range
  • Factor Scores: Parallax proprietary scoring across all five factors
  • Fundamental Metrics: Traditional valuation and quality measures
  • Technical Indicators: Price momentum and volatility measures
  • Custom Filters: User-defined screening criteria

Results Panel (Center):

  • Screening Results: Real-time list of stocks meeting your criteria
  • Key Metrics Display: Customizable columns showing relevant data
  • Sorting Options: Multiple sorting criteria for result organization
  • Action Buttons: Quick access to analysis, watchlists, and portfolio building

Detail Panel (Right Side):

  • Individual Stock Analysis: Deep-dive into selected securities
  • Factor Breakdown: Visual representation of factor scores
  • Peer Comparison: How the stock compares to sector peers
  • Integration Options: Connect to other platform features

Your First Screen: Step-by-Step

Step 1: Define Your Investment Universe

Start with broad parameters to understand the available universe:
- Market Cap: All (or specify Large/Mid/Small cap preference)
- Geography: US (expand internationally as you get comfortable)
- Sectors: All (or focus on sectors you understand)
- Minimum Volume: 100,000 shares/day (ensures liquidity)

Step 2: Apply Basic Factor Criteria

Begin with simple factor requirements:
- Overall Parallax Score: > 6 (above average quality)
- Quality Factor: > 5 (basic quality threshold)
- Value OR Momentum: > 6 (choose based on market conditions)

Step 3: Review and Refine Results

  • Review the number of results (aim for 20-100 for detailed analysis)
  • If too few results: Lower factor thresholds or expand universe
  • If too many results: Tighten criteria or add additional filters

Step 4: Analyze Top Candidates

  • Sort by Overall Parallax Score or your preferred metric
  • Review top 10-20 results in detail
  • Click individual stocks for comprehensive analysis

Advanced Screening Strategies

Factor-Based Screening Approaches

Pure Factor Strategies

High-Quality Growth Screening:

Investment Thesis: Find high-quality companies with strong growth prospects
Screening Criteria:
  Quality Factor: > 8
  Momentum Factor: > 7
  ROE: > 15%
  Revenue Growth (3Y): > 12%
  Debt/Equity: less than 0.5
  Market Cap: > $2B (for stability)

Typical Results: 15-30 stocks
Review Frequency: Monthly
Best Market Conditions: Growth-friendly environments, stable interest rates

Deep Value Opportunities:

Investment Thesis: Undervalued companies with solid fundamentals
Screening Criteria:
  Value Factor: > 8
  Quality Factor: > 5 (avoid value traps)
  P/E Ratio: < 15
  P/B Ratio: < 2.5
  ROE: > 8%
  Debt/Equity: less than 1.0

Typical Results: 25-50 stocks
Review Frequency: Quarterly
Best Market Conditions: Market recovery periods, rising rates

Defensive Income Screening:

Investment Thesis: Stable companies providing consistent income
Screening Criteria:
  Defensive Factor: > 7
  Quality Factor: > 6
  Dividend Yield: 2-6%
  Dividend Growth (5Y): > 3%
  Payout Ratio: less than 70%
  Beta: less than 1.2

Typical Results: 30-60 stocks
Review Frequency: Semi-annually
Best Market Conditions: Market uncertainty, late-cycle environments

Multi-Factor Combinations

Balanced Factor Approach:

Investment Thesis: Well-rounded companies across multiple factors
Screening Criteria:
  Overall Parallax Score: > 7
  No factor score below 4 (avoid major weaknesses)
  At least two factors > 7 (ensure strengths)
  Market Cap: $1B - $50B (mid-to-large cap sweet spot)

Typical Results: 40-80 stocks
Review Frequency: Quarterly
Best Market Conditions: Most market environments (all-weather approach)

Momentum + Quality Screening:

Investment Thesis: High-quality companies riding positive trends
Screening Criteria:
  Quality Factor: > 7
  Momentum Factor: > 7
  6M Price Return: > 10%
  Earnings Revisions: Positive trend
  ROA: > 8%
  Interest Coverage: > 3x

Typical Results: 20-40 stocks
Review Frequency: Monthly
Best Market Conditions: Bull markets, earnings upgrade cycles

Sector-Specific Screening

Technology Sector Focus

Tech-Specific Criteria:
  Sector: Technology
  Quality Factor: > 6 (higher bar for tech)
  Momentum Factor: > 5
  Revenue Growth: > 15%
  R&D/Revenue: > 8% (innovation focus)
  Cash/Debt Ratio: > 1 (balance sheet strength)

Additional Considerations:
- Focus on sub-sectors (software, semiconductors, etc.)
- Consider growth stage (high-growth vs. mature)
- Evaluate competitive moats and market position

Healthcare Screening

Healthcare-Specific Criteria:
  Sector: Healthcare
  Quality Factor: > 7 (regulatory resilience)
  Defensive Factor: > 5 (stability requirements)
  Operating Margin: > 15%
  Pipeline Strength: Qualitative assessment
  Regulatory Risk: Low to moderate

Additional Considerations:
- Distinguish between pharma, biotech, and medical devices
- Consider patent cliffs and pipeline development
- Evaluate regulatory approval timelines

Geographic and Market Cap Strategies

International Diversification Screening

International Focus:
  Geography: Developed International OR Emerging Markets
  Market Cap: > $1B (liquidity requirements)
  ADR Availability: Yes (US accessibility)
  Quality Factor: > 6 (additional due diligence needed)
  Currency Hedging: Consider for large positions

Regional Considerations:
- European markets: Focus on quality and defensive characteristics
- Asian markets: Emphasize growth and momentum factors
- Emerging markets: Higher quality thresholds due to additional risks

Small-Cap Opportunity Screening

Small-Cap Specific:
  Market Cap: $300M - $2B
  Quality Factor: > 6 (higher bar for small companies)
  Revenue Growth: > 20% (growth requirement)
  Analyst Coverage: > 3 analysts (research availability)
  Institutional Ownership: 20-80% (professional validation)
  Trading Volume: > 50,000 shares/day

Risk Considerations:
- Higher volatility and risk
- Lower liquidity and higher transaction costs
- Greater sensitivity to economic cycles
- Less analyst coverage and information

Practical Screening Workflows

Weekly Screening Routine

Monday Market Setup:

  1. Run broad momentum screen to identify trending sectors
  2. Review weekend news for sector-specific impacts
  3. Update watchlists based on factor score changes

Wednesday Mid-Week Review:

  1. Check earnings-driven momentum opportunities
  2. Review any new screening alerts
  3. Analyze individual candidates from Monday's screen

Friday Portfolio Integration:

  1. Export promising candidates to portfolio builder
  2. Review how screened stocks fit existing portfolio
  3. Plan weekend deeper analysis of top candidates

Monthly Deep-Dive Process

Week 1: Universe Review

  • Run comprehensive screens across all major strategies
  • Update screening templates based on market conditions
  • Identify emerging sector and factor trends

Week 2: Individual Analysis

  • Deep-dive analysis of top screening candidates
  • Use AI Chat to research specific opportunities
  • Begin building position sizing and timing considerations

Week 3: Portfolio Integration

  • Model portfolio impact of potential additions
  • Consider tax implications and trading costs
  • Plan implementation timeline and approach

Week 4: Implementation and Monitoring

  • Execute trades based on screening analysis
  • Set up alerts for new screening candidates
  • Review performance of previously screened positions

Seasonal and Cyclical Screening

Market Cycle Adaptations

Early Bull Market:

Emphasis: Value and Small-Cap factors
Screening Focus:
  Value Factor: > 7
  Size Factor: > 5 (small-cap tilt)
  Beta: 1.2 - 1.8 (cyclical exposure)
  Operating Leverage: High (earnings sensitivity)

Mid-Bull Market:

Emphasis: Quality and Growth factors
Screening Focus:
  Quality Factor: > 8
  Momentum Factor: > 6
  Revenue Growth: > 15%
  Market Leadership: Sector/industry leaders

Late Bull Market:

Emphasis: Defensive and Quality factors
Screening Focus:
  Defensive Factor: > 7
  Quality Factor: > 8
  Volatility: Below market average
  Dividend Yield: > 2%

Bear Market:

Emphasis: Defensive and Value factors
Screening Focus:
  Defensive Factor: > 8
  Quality Factor: > 7
  Debt/Equity: less than 0.3
  Free Cash Flow: Positive and growing

Integration with Platform Features

From Screener to Analyzer

Workflow Example:

  1. Screen: Find high-quality dividend stocks
  2. Export: Send top 20 results to portfolio builder
  3. Build: Create optimized dividend portfolio
  4. Analyze: Upload to analyzer for comprehensive review
  5. Implement: Execute trades based on analysis

Using Chat for Screening Enhancement

AI-Assisted Screening:

Chat Query: "What screening criteria should I use to find technology companies that could benefit from the current AI trend?"

AI Response: Suggests specific factors, metrics, and sub-sector focus
Follow-up: Apply suggested criteria in screener
Validation: Discuss results with AI for refinement

Watchlist Integration

Systematic Monitoring:

  1. Create Themed Watchlists: Group screened stocks by strategy
  2. Set Factor Alerts: Monitor when stocks meet/fail screening criteria
  3. Performance Tracking: Track how screened stocks perform over time
  4. Rebalancing Signals: Identify when holdings no longer meet criteria

Screening Best Practices

Avoiding Common Pitfalls

Over-Optimization:

  • Don't create overly complex screens that produce few results
  • Focus on 3-5 key criteria rather than 15-20 filters
  • Remember that perfect historical backtests may not work forward

Neglecting Qualitative Factors:

  • Use screening as a starting point, not the final decision
  • Consider management quality, competitive position, and industry trends
  • Validate quantitative screens with qualitative research

Ignoring Market Conditions:

  • Adapt screening criteria to current market environment
  • Understand which factors work in different market cycles
  • Don't rigidly stick to one screening approach

Poor Risk Management:

  • Consider position sizing and portfolio impact
  • Don't ignore correlation risk among screened stocks
  • Set stop-loss levels and exit criteria

Optimization Techniques

Backtesting Screens:

  • Test historical performance of screening criteria
  • Understand drawdown patterns and volatility
  • Optimize for risk-adjusted returns, not just total returns

Dynamic Screening:

  • Adjust factor weightings based on market conditions
  • Use economic indicators to inform screening parameters
  • Implement momentum and mean-reversion overlays

Portfolio Context:

  • Consider existing portfolio when screening for new positions
  • Screen for stocks that improve overall portfolio factor balance
  • Avoid over-concentration in similar factor profiles

Advanced Screening Applications

Event-Driven Screening

Earnings Season Opportunities:

Pre-Earnings Screen:
  Momentum Factor: > 6
  Earnings Revisions: Positive
  Short Interest: less than 5% (avoid squeeze risk)
  Options Volume: Above average (anticipation)

Post-Earnings Screen:
  Earnings Surprise: > 5%
  Price Reaction: Moderate (avoiding over-reactions)
  Guidance: Raised or maintained
  Technical Setup: Bullish continuation patterns

Merger & Acquisition Targets:

M&A Target Screen:
  Value Factor: > 7 (attractive valuations)
  Quality Factor: > 6 (strategic assets)
  Market Cap: $500M - $10B (typical target size)
  Institutional Ownership: > 50% (professional interest)
  Recent Performance: Lagging sector (opportunity)

Thematic Screening

ESG and Sustainable Investing:

ESG-Focused Screen:
  ESG Score: > 7 (high sustainability rating)
  Quality Factor: > 6
  Revenue from Sustainable Sources: > 50%
  Carbon Footprint: Below industry average
  Governance Score: > 8

Inflation Protection Screening:

Inflation Hedge Screen:
  Sectors: Energy, Materials, Real Estate
  Pricing Power: Strong (qualitative assessment)
  Asset-Heavy Business: Real assets backing
  Historical Inflation Correlation: Positive
  Dividend Growth: > Inflation rate

Quantitative Enhancement

Statistical Validation:

  • Apply significance tests to screening results
  • Use correlation analysis to avoid redundant criteria
  • Implement robust statistics to handle outliers

Machine Learning Integration:

  • Use AI to identify non-obvious screening patterns
  • Apply clustering techniques to group similar opportunities
  • Implement ensemble methods combining multiple screens

Troubleshooting Common Issues

Too Few Results

Possible Causes:

  • Criteria too restrictive
  • Market conditions not favorable for strategy
  • Screening universe too narrow

Solutions:

  • Lower factor thresholds gradually
  • Expand geographic or sector universe
  • Check if fundamental filters are too tight

Too Many Results

Possible Causes:

  • Criteria too broad
  • Bull market creating widespread opportunities
  • Fundamental filters too loose

Solutions:

  • Add additional quality filters
  • Tighten factor score requirements
  • Apply technical filters for timing

Poor Screen Performance

Possible Causes:

  • Market regime change
  • Over-fitted historical criteria
  • Ignoring transaction costs

Solutions:

  • Adapt to current market conditions
  • Simplify screening criteria
  • Factor in implementation costs

Next Steps

Developing Screening Expertise

Week 1-2: Master basic screening with single-factor approaches Week 3-4: Combine multiple factors and understand interactions Month 2: Develop sector-specific and market condition adaptations Month 3: Create systematic screening processes and workflows

Advanced Learning

Effective stock screening combines systematic quantitative analysis with market intuition and qualitative judgment. Start with simple approaches and gradually build more sophisticated screening workflows as you develop expertise with the platform.