Screening Filters
PriceAboveMA200 (Price above 200-day moving average)
- Purpose: Focus on stocks in a longer-term uptrend rather than those in clear downtrends.
- Rationale: A 200-day moving average is a common indicator of a stock’s long-term trend. Requiring price to be above this line means:
- The market currently values the stock positively.
- You filter out many structurally weak or declining names.
- For someone asking for the “best” stocks, it makes sense to start with companies that are not in a technical downtrend.
is_index_component: GSPC (S&P 500 components only)
- Purpose: Limit results to established, large, and widely followed U.S. companies.
- Rationale: The S&P 500 contains large, often industry-leading firms that:
- Have stronger disclosure standards and better governance on average.
- Are more liquid (easier and cheaper to trade).
- Represent companies that institutions already consider among the “core” investable universe.
This is a reasonable proxy list for “best-quality” stocks instead of tiny or speculative names.
net_margin ≥ 10%
- Purpose: Ensure the companies are meaningfully profitable.
- Rationale: Net margin measures how much profit a company makes for each dollar of sales. A minimum of 10%:
- Filters out low-margin, struggling, or barely profitable businesses.
- Favors companies with business models that can generate strong bottom-line results.
- Aligns with the idea of “high-quality” or “strong” businesses that might reasonably be considered among the “best.”
return_on_equity (ROE) ≥ 12%
- Purpose: Capture companies that generate attractive returns on shareholders’ capital.
- Rationale: ROE shows how efficiently a company turns equity into profit. A threshold of 12%:
- Targets firms with above-average profitability relative to their capital base.
- Excludes capital-inefficient or poorly managed companies.
- Supports the search for businesses that are not just profitable, but also good allocators of capital—often a hallmark of “quality” stocks.
eps_5yr_cagr ≥ 5% (Earnings per share growth, 5-year CAGR)
- Purpose: Require consistent earnings growth over time.
- Rationale: EPS 5-year compound annual growth rate (CAGR) shows whether profits are growing at a healthy pace. A minimum of 5%:
- Focuses on companies expanding their profitability, not stagnating.
- Reduces the chance of picking “value traps” that are cheap but not growing.
- Matches the idea of “best” as not just good today, but improving over time.
revenue_5yr_cagr ≥ 5% (Revenue growth, 5-year CAGR)
- Purpose: Ensure top-line (sales) growth, not just accounting-based profit growth.
- Rationale: Revenue growth shows demand for the company’s products or services. A 5% minimum:
- Confirms the business is actually expanding, not just cutting costs to grow earnings.
- Filters for companies with growing market presence or pricing power.
- Helps identify structurally healthier businesses rather than those stagnating in shrinking markets.
pb_ratio ≤ 5 (Price-to-book ratio)
- Purpose: Avoid the most extremely overvalued companies by book value.
- Rationale: Price-to-book compares market value to the company’s net assets. Capping it at 5:
- Screens out some speculative or “bubble-like” valuations.
- Keeps the list more grounded in reasonable valuation territory.
- For “best” stocks, you’re aiming for quality at a sensible price, not just any price.
pe_ttm between 5 and 30 (Price-to-earnings, trailing twelve months)
- Purpose: Keep valuations in a reasonable range—exclude both distressed and ultra-expensive names.
- Rationale:
- Minimum PE of 5: Helps avoid many distressed or potentially manipulated situations (where earnings are temporarily inflated, or the market is signaling serious risk).
- Maximum PE of 30: Excludes very high multiple stocks that may be priced for perfection or heavy speculation.
Together, this range targets:
- Companies that are not “penny-value traps” nor extremely overpriced momentum names.
- A balanced set of candidates that combine quality with somewhat reasonable valuation.
Why Results Match the User’s Request (“best stocks for free”)
- The screen focuses on high-quality fundamentals: solid profitability (net margin, ROE), consistent growth (5-year EPS and revenue growth), and membership in the S&P 500.
- It adds a technical quality layer by requiring the price to be above the 200-day moving average, favoring stocks in established uptrends.
- It enforces valuation discipline (PE and PB limits), so you’re not just getting good companies, but also avoiding many that are priced excessively.
- Collectively, these filters don’t “guarantee” the absolute best stocks, but they narrow the universe to a reasonable set of strong, growing, and not-extremely-overvalued large companies, which is a practical and professional interpretation of “best stocks.”
This list is generated based on data from one or more third party data providers. It is provided for informational purposes only by Intellectia.AI, and is not investment advice or a recommendation. Intellectia does not make any warranty or guarantee relating to the accuracy, timeliness or completeness of any third-party information, and the provision of this information does not constitute a recommendation.