How to picker stock

Screening Filters

1. Market Cap ≥ $2,000,000,000

   • Purpose: Focus on mid‑cap and larger companies.
   • Rationale: When learning “how to pick stocks,” it’s usually safer to start with established businesses rather than tiny, speculative names. A $2B+ market cap tends to mean:
     • More stable business models
     • More analyst coverage and information
     • Less extreme volatility than micro/small‑caps

2. Monthly Average Dollar Volume ≥ $500,000

   • Purpose: Ensure the stocks are reasonably liquid (easy to get in and out).
   • Rationale: Liquidity is a core, often overlooked part of stock picking. Adequate dollar volume:
     • Reduces transaction costs and price slippage when you trade
     • Makes charts and technical signals more reliable
     • Lowers the risk of being “stuck” in a thinly traded name

3. Price Above 200-Day Moving Average (PriceAboveMA200)

   • Purpose: Filter for stocks in a longer‑term uptrend.
   • Rationale: A simple, widely used rule in technical and trend‑following strategies is to favor stocks trading above their 200‑day moving average:
     • Indicates positive long‑term momentum
     • Helps you avoid many names in established downtrends
     • Aligns with the principle “trade with the trend,” which is a practical guideline when learning to pick stocks

4. Region: United States

   • Purpose: Limit to U.S. companies.
   • Rationale: For most investors, starting with one major market makes analysis easier:
     • Consistent accounting standards (U.S. GAAP)
     • Strong disclosure rules and regulatory oversight
     • Abundant research, news, and educational resources focused on U.S. equities

5. Exchange: NYSE (XNYS), Nasdaq (XNAS), NYSE American (XASE)

   • Purpose: Include only major U.S. exchanges.
   • Rationale: Stocks on primary exchanges:
     • Must meet listing standards (financial, governance, reporting)
     • Generally have better liquidity and tighter spreads
     • Are easier to research and follow than OTC or pink‑sheet stocks

6. EPS (TTM) > 0

   • Purpose: Require the company to be currently profitable.
   • Rationale: When learning how to pick stocks, starting with profitable companies simplifies fundamental analysis:
     • Positive earnings suggest a functioning, viable business model
     • Allows use of standard valuation metrics (P/E, etc.)
     • Avoids the complications of early‑stage, cash‑burning companies

7. Debt/Equity ≤ 1.0

   • Purpose: Limit to companies with moderate or conservative leverage.
   • Rationale: Balance sheet strength is central to quality:
     • Lower debt reduces bankruptcy and refinancing risk
     • Companies are generally more resilient in downturns
     • You avoid businesses where earnings are highly vulnerable to interest-rate changes

8. 5‑Year Revenue CAGR ≥ 5%

   • Purpose: Ensure the company has been growing its sales meaningfully over time.
   • Rationale: Growth is a core driver of long‑term returns:
     • A 5%+ revenue compound annual growth rate indicates expanding demand or market share
     • Helps filter out stagnating or shrinking businesses
     • Combines with profitability and low debt to highlight sustainable growth stories

Why Results Match Your Question (“How to pick stocks?”)

• These filters embed basic, robust principles of stock selection: quality (profitability, low debt), growth (revenue CAGR), trend (price above 200‑day MA), and practicality (size and liquidity).
• They steer you away from the riskiest parts of the market (illiquid, tiny, unprofitable, highly leveraged names), which is especially important when you’re still developing a process.
• They create a manageable starting universe of reasonably solid U.S. companies, within which you can then apply deeper analysis (valuation, competitive advantages, sector views, risk tolerance) as you refine your own method of picking stocks.