Make me money

Screening Filters

1. is_index_component: ['GSPC'] (S&P 500)

   • Purpose: Limit the universe to companies that are members of the S&P 500 index.
   • Rationale:
     • Your question is specifically about generating profits from investments in the S&P 500 (INX).
     • By restricting results to S&P 500 constituents, the screen ensures all stocks are directly relevant to that index.
     • Any strategies or insights built on the result set can be directly integrated into an S&P 500-based approach (e.g., stock-picking within the index, tilting a core S&P 500 holding toward certain types of companies, etc.).

2. year_price_change_pct: min 10

   • Purpose: Select stocks within the S&P 500 that have appreciated at least 10% over the past year.
   • Rationale:
     • A positive and meaningful 1-year performance filter highlights stocks with recent price momentum and/or improving fundamentals.
     • For profit-generation strategies, focusing on winners (rather than laggards) aligns with momentum-based or “trend-following” approaches often used within broad indices.
     • It ensures you’re looking at companies that are already contributing positively to S&P 500 returns, potentially offering an edge if you overweight or selectively invest in them.

3. return_on_equity: min 15

   • Purpose: Capture companies with strong profitability relative to shareholder equity.
   • Rationale:
     • ROE ≥ 15% is generally considered a sign of a high-quality, efficiently run business.
     • High-ROE companies tend to compound capital more effectively over time, which is directly relevant for generating long-term profits.
     • Within the S&P 500, this filter helps isolate quality leaders rather than average or low-profitability firms, aligning with a “quality factor” tilt that historically has produced better risk-adjusted returns.

4. eps_5yr_cagr: min 10

   • Purpose: Focus on companies with at least 10% compound annual growth in earnings per share over the last 5 years.
   • Rationale:
     • Sustained EPS growth is a key driver of long-term stock price appreciation.
     • A 5-year lookback emphasizes durable, not just short-term, growth—useful for building a profit-generating strategy that isn’t purely speculative.
     • Within the S&P 500, this highlights companies with proven growth trajectories that can support future price gains and, in many cases, dividend growth as well.

5. pe_ttm: min 10, max 25

   • Purpose: Filter out extremely low-valuation (possibly distressed or cyclical trough) and extremely high-valuation (possibly speculative) stocks, focusing on a “reasonable” valuation band.
   • Rationale:
     • P/E below ~10 can indicate special situations or significant perceived risk; P/E above ~25 may imply very high growth expectations and elevated downside risk if expectations are missed.
     • By bounding P/E, the screen aims to identify profitable, growing S&P 500 companies that are neither “deep value” with potential structural issues, nor “hyper-growth” priced for perfection.
     • This supports a balanced strategy: quality growth at a reasonable price (a common approach to generating profits while trying to manage valuation risk).

Why Results Match Your Goal (Profiting from the S&P 500)

• Direct linkage to the index:

  • The is_index_component = GSPC filter ensures every result is part of the S&P 500, so any stock-level strategy (overweighting, factor tilts, satellite holdings) is directly compatible with an S&P 500–based core investment.

• Quality and growth tilt within the index:

  • High return_on_equity and strong eps_5yr_cagr isolate businesses that are both profitable and growing earnings, which are fundamental drivers of long-run shareholder returns.
  • Tilting your S&P 500 exposure toward these kinds of companies is a common way to aim for returns above the broad index.

• Reasonable valuation discipline:

  • The pe_ttm band (10–25) combines a growth/quality focus with valuation sanity checks—helping avoid the riskiest extremes where profits are more speculative or risk of multiple compression is high.

• Momentum / recent performance confirmation:

  • The year_price_change_pct ≥ 10 filter adds a momentum component by favoring stocks already trending positively, which many investors use to improve the probability of near- to medium-term gains within an index.

Taken together, these filters transform the broad S&P 500 into a more targeted subset of index members: profitable, growing, reasonably valued companies with positive recent performance. This subset can underpin strategies such as:

• Overweighting these names relative to a plain S&P 500 ETF.
• Building a “satellite” portfolio of screened stocks around a core S&P 500 holding.
• Using the filter as a starting point for deeper fundamental work aimed at generating above-index profits.