My 3 Step Guide to Quickly Screen Stocks

Hey guys, welcome back to the channel. In this video, we're going to be talking about a simple three-step method that I personally use in order to quickly screen stocks.

So, we're not thinking about, you know, potentially making an investment just yet. We're just looking at getting a feel for what's out there—how to quickly sort through whether a company might have some potential or whether it's a dud straight off the bat.

So, three-step method—that's what we're going to be talking about in this video. I hope you guys enjoy it! If you find it useful, please leave a like on the video. It is the easiest way to support the video and the channel. Make sure you subscribe as well if you'd like to see more content similar to this in the future, and click the notification bell if you want to be notified when I release new videos.

But for now, let's get stuck into it.

[Music]

So, as we know, there are four key steps to this long-term value investing approach that is modeled off of people like Warren Buffett, Peter Lynch, Monish Pabrai, Charlie Munger, Benjamin Graham—all these people.

The first one is obviously we have to understand the business. The second one is that the company we invest in has to have a competitive advantage. The third is that the management team has to run the company with skill and integrity. And then fourth, we have to make sure we buy the shares when they're at a discount to intrinsic value—when they're at a margin of safety.

So, that's the full method. However, when we're screening stocks, obviously that four-step method takes a very long time to go through to actually go ahead and make an investment.

So, when it comes to screening, there are going to be some things that we leave behind a little bit and other things that we quickly focus on. One of the things that we're going to leave behind is definitely valuation because valuation comes last, after you've done all the research before.

And to be able to value the shares correctly, you have to have a very solid understanding of the business, which takes time. And because it takes time, that's also the second area that kind of loses out when we're just skimming and screening stocks. We don't bother to go into too much depth to understand the business just yet because we're just getting a feel for whether this stock might be something that we want to look into even further.

Now, I will say straight off the bat, if you are someone that is interested in learning that full, you know, four-step value investing approach to go and actually make a proper investment, then check out Introduction to Stock Analysis. That's an eight-hour course that I made. It's over on Profitable. Links are down in the description. But that's if you're interested; check it out.

But for now, let's talk through this three-step screening method.

The first step in the process is really to make sure that the company is growing and to make sure that there's nothing that stands out as an immediate red flag with the financials.

Then the second step is obviously we have to look for companies with a moat. So we're screening for companies with a competitive advantage. As we know, we never invest in a company unless it has some form of competitive advantage that keeps it ahead of its competitors.

And then the third step in the screening process is to quickly check whether the management team is running the business effectively—whether they are being, whether they're doing a good job, essentially.

So, with that said, let's get into each of these three steps. The first is obviously screening the financials of the business and making sure that the company is actually going forwards—it's growing, it's not going backwards.

Now, to do this, I always just head over to a website called Hypercharts. Now, Hypercharts are also the sponsor of this video. So, Hypercharts is actually started by a friend of mine. You might know him, Galli Russell from Hyperchange, and his friend Mo.

And essentially what the website aims to do is it takes the complicated kind of tabulated numbers out of the company's financial reports—the long, boring financial statements—and it just pu...