What stock Should I Buy

Screening Filters

1. Market Capitalization ≥ $5,000,000,000 (Large/Mid Caps)

   • Purpose: Focus on larger, more established companies.
   • Rationale:
     • When someone asks “What stock should I buy?” without specifying risk tolerance, time horizon, or sector, a reasonable default is to avoid very small or highly speculative companies.
     • A minimum market cap of $5B steers the search toward companies that are typically more stable, more liquid (easier to buy/sell), and better covered by analysts and institutions.

2. Return on Equity (ROE) ≥ 8%

   • Purpose: Ensure the companies generate solid profitability relative to shareholders’ equity.
   • Rationale:
     • ROE is a core quality and efficiency metric: how well management uses shareholders’ capital to generate profits.
     • A threshold of 8% filters out chronically low-return or poorly managed businesses, and targets firms that have at least decent underlying business performance.

3. Debt-to-Equity Ratio ≤ 1.5

   • Purpose: Avoid companies that rely too heavily on debt financing.
   • Rationale:
     • High leverage can amplify risk, especially in downturns or rising-rate environments.
     • Capping debt/equity at 1.5 helps keep the list to companies with more balanced capital structures, reducing the chance you end up in a stock vulnerable to financial stress.

4. P/E (TTM) between 5 and 40

   • Purpose: Screen for stocks with valuations that are not extremely cheap for potentially bad reasons, nor extremely expensive/speculative.
   • Rationale:
     • A minimum P/E of 5 avoids many distressed names where earnings quality or sustainability may be questionable (stocks can be “too cheap” because the market expects problems).
     • A maximum P/E of 40 excludes the most richly valued, momentum-driven stocks where expectations are very high and downside risk from a disappointment can be significant.
     • This range doesn’t guarantee a “good deal,” but it keeps the focus on valuations that are broadly within a reasonable band for established companies.

5. Analyst Consensus: Strong Buy, Moderate Buy, or Hold

   • Purpose: Align with at least neutral-to-positive professional sentiment and avoid stocks widely viewed as “Sells.”
   • Rationale:
     • Analyst ratings aggregate the views of professionals who follow the companies closely.
     • By including only Strong Buy, Moderate Buy, and Hold, the screen excludes names that the analyst community generally expects to underperform or sees as fundamentally weak.
     • This doesn’t guarantee performance, but it adds an additional quality/sentiment check on top of fundamentals.

Why the Results Match Your Question (“What stock should I buy?”)

• You didn’t specify risk level, sector preference, or strategy, so the screen defaults to general-purpose investing criteria: larger, profitable, reasonably valued, not overleveraged, and not broadly disliked by analysts.
• The filters collectively aim to:
  • Reduce the chance of picking very risky or illiquid names (market cap filter).
  • Emphasize business quality and financial health (ROE and debt/equity).
  • Avoid the extremes of bubble-like valuations or deep-distress situations (P/E range).
  • Incorporate a market-informed check via analyst consensus (sentiment filter).

This doesn’t tell you “the one stock” to buy—no screen can do that—but it narrows the universe to a more reasonable starting set of candidates that are broadly suitable for many investors. From there, you’d typically refine further based on your own goals (growth vs. income, sectors you like, risk tolerance, etc.).