A stock screener for undervalued stocks is a tool that helps you look for undervalued stocks. It can take the thousands of tickers on the stock market and filter them down to a manageable handful that you can research further to determine whether they’re worth trading.
Undervalued stocks sound great on paper — you can buy them at a lower price, then sell them when the market price reflects their perceived value. But there’s more to trading undervalued stocks than that. In this article, I’ll show you how to find and evaluate the best undervalued stocks to trade!
What are the best stock screeners for undervalued stocks, and how can they help you find these cheap stocks? Let’s dive right in!
What Are Undervalued Stocks?
Undervalued stocks are stocks that are priced below their perceived intrinsic value. People often trade undervalued stocks expecting to see profits when their prices catch up with their intrinsic value.
How to Evaluate Undervalued Stocks
You can evaluate undervalued stocks by looking at certain indicators, like their price-to-earnings ratio (P/E ratio) and earnings per share (EPS).
A low P/E ratio signifies a low share price compared to the company’s annual earnings, which might mean its stock is undervalued. Meanwhile, a high EPS signifies a profitable company.
You can’t guarantee that the price of an undervalued stock will eventually catch up to its “value” though. Sometimes, undervalued stocks are priced at a seeming discount because they have a bad growth forecast or the companies are in a flagging industry.
Doing your due diligence is essential. Look at the company’s financials and examine its track record to determine its share value prospects before trading. Knowing more about the stock’s ins and outs increases your likelihood of making smart trades.
What Is a Stock Screener for Undervalued Stocks?
A stock screener for undervalued stocks is a tool that helps you find undervalued stocks. You can just plug in your preferred criteria and filter the thousands of stocks you can trade into a handful of tickers you can put in your watchlist and dive deeper into.
Read my article about the basics of stock screeners to learn more about why it’s important to use them.
Importance of Using an Undervalued Stocks Screener
Using an undervalued stock screener helps you find the stocks that match your preferences and trading strategies. Understand — finding a good undervalued stock is more about researching than screening, but you can’t research every single stock.
Using an undervalued stock screener gives you a curated selection of tickers you can dive deeper into, so you can determine whether their share price will eventually reflect their perceived value.
Why Do You Need a Stock Screener for Undervalued Stocks?
You need a stock screener for undervalued stocks to filter out the stocks that don’t match your trading strategy or preferences. This way, you can cut down the flow of information to make it more manageable.
Think of a stock screener as a sieve — you pour all the stocks in an exchange into it and let the ones that don’t match your criteria pass through. Then, all you’re left with are the stocks that match your criteria.
You also need a stock screener for undervalued stocks because it gives you lots of fine control over your searches. This means your scanner will only give you the stocks that perfectly fit your criteria — which sometimes might include relevant stocks that you previously overlooked.
Different stock screeners cater to different trading needs. Check out my lists for the best stock screeners for dividend yields and the best stock screeners for growth stocks. You can also read my top overall stock screener picks.
Advantages of an Undervalued Growth Stock Screener
The most important advantage of undervalued growth stock screeners is their ability to filter stocks according to your criteria. This means they only return the handful of stocks you’re interested in trading in the first place from the thousands of tradable tickers.
Stock filtering also helps in your research. Instead of looking deeper into hundreds or even thousands of stocks, you can just research the stocks that your screener gives you.
How We Evaluated These Best Stock Screeners for Undervalued Stocks
Not all stock screeners are cut out to scan for undervalued stocks. You gotta pick the right one — which means you have to know what you’re looking for.
Here are two criteria I use when looking for undervalued stock screeners:
- Pricing: Most high-quality undervalued stock screeners are paid products. Find the screener that fits your budget while still catering to your trading needs.
- Customizability: A stock screener is only as good as its indicators. Find a stock screener that you can customize according to your needs.
Those aren’t the only criteria I use. Check my guide to the best stock screener criteria for additional ways to refine your search.
Best Undervalued Stock Screeners
Here are my picks for the best undervalued stock screener platforms:
- StocksToTrade — Best Overall Undervalued Stock Screener
- TrendSpider — Best Undervalued Stock Screener for Automated Trading
- StockRover — Best Undervalued Stock Screener for In-Depth Research
- Black Box Stocks — Best Undervalued Stock Screener for Options Trading
- TC2000 — Best Undervalued Stock Screener for Comparing Stocks
There’s no rule that says you gotta use one screener — try them all and stick with the ones that work best!
1. StocksToTrade — Best Overall Undervalued Stock Screener
My first undervalued stock screener pick is StocksToTrade.
There are so many reasons why StocksToTrade tops my list. StocksToTrade is insanely customizable, comes with loads of trader-built screens, and more. It’s also great for screening for undervalued stocks — it has indicators like EPS and P/E ratio built in.
Its true strength is in trading though. If you have a strategy balanced between long-term and short-term trading, it’s an awesome resource!
StocksToTrade also comes packaged with Oracle, a powerful algorithm-based chart analysis tool. This nifty piece of technology spots the day’s most tradable stocks and gives you actionable trade signals. Get a taste right now by signing up for NO-COST Oracle trade alerts!
2. TrendSpider — Best Undervalued Stock Screener for Automated Trading
My second undervalued stock screener pick is TrendSpider.
TrendSpider offers some of the best trading bots in the business — no programming skills needed. All you need to do is set specific trading requirements, and the bot will do the rest for you.
TrendSpider’s market scanner works just as you’d expect — you plug criteria in, and it returns stocks matching your requirements. It offers loads of pre-built scans as well as lets you make custom scans of your own.
3. StockRover — Best Undervalued Stock Screener for In-Depth Research
My third undervalued stock screener pick is Stock Rover.
Stock Rover offers in-depth research data on thousands of tickers that help you to estimate a stock’s fair value. In addition to helping you identify which stocks are undervalued, you may also get a good feel for the stocks’ growth potential.
Stock Rover’s scanner is also pretty robust — you get 140 pre-built screeners right out of the box. You can also build custom screeners with over 650 metrics and indicators to fit your trading preferences.
4. Black Box Stocks — Best Undervalued Stock Screener for Options Trading
My fourth undervalued stock screener pick is Black Box Stocks.
Black Box Stocks is all about the most accurate, to-the-second real-time data. If you’re a value investor, you might not think this is a big need…
If you’re looking to trade options on undervalued stocks, accurate market data is HUGE. Black Box Stocks streams current market data for over 900,000 possible options contract configurations.
Its dedicated options screener is also a beast. It’s filled with nifty capabilities, like identifying options trades executed above the ask. These can give you valuable clues to demand…
The rest of its offerings are pretty damn powerful too!
5. TC2000 — Best Undervalued Stock Screener for Comparing Stocks
My fifth undervalued stock screener pick is TC2000.
TC2000’s EasyScan scanner makes comparing the stocks you filtered a simple process. This way, you can rank your filtered stocks based on how likely they’ll rise in price or any other metric you have in mind.
TC2000 is also highly customizable. You get over 100 premade filters right off the bat, and you can make even more with its code-based custom scan creator. While it has a bit of a learning curve, once you get the hang of this scan creator the market will be your oyster!
Final Thoughts
A stock screener for undervalued stocks helps you find stocks that are priced below their perceived value. By using screeners, you can find undervalued stocks that match your trading strategies, so you can research them further.
But be careful when hunting undervalued stocks. Sometimes a company’s share price just won’t rise to match the company’s value. You have many reasons for this happening, from a bad growth forecast to being part of a flagging industry. That’s why you need to dig deeper to make sure the undervalued stock becomes properly valued down the line.
Here’s another stock screener for you to try: millionaire trader Matt Monaco’s Alpha Scanner. With his software engineering background, Matt built a stock screener based on his profitable trading style — and his life’s work can be your edge in trading.
The Alpha Scanner is jam-packed with live mentoring sessions, trading alerts, and so much more. Want to learn more?
Sign up for the next Alpha Scanner LIVE broadcast for more information!