Welcome to Ameritrade Plus University
 
investing 101Stock screener tool
Michael Sivy Historically, the S&P 500 stock index has returned around 12 percent a year. So companies with projected earnings growth and dividend yields that top 12 percent are the ones most likely to be market beaters. The point of the Sivy Screener is to sort through thousands of stocks (or just the Sivy 100 - a collection of our favorites), and unearth only those with above-average prospects.

 1. Choose kind of stock
VALUE STOCKS
GROWTH STOCKS
DIVIDEND STOCKS
• Earnings growth of between 9 and 15 percent: Healthy -- but sustainable.
• P/E less than 20: Below the S&P average.


• Earnings growth of at least 12 percent: Above the historical average.
• P/E less than 32: Pay above the market average to achieve higher returns.


• Dividend yield of at least 3 percent: Above the market average of 1.4 percent.
• P/E less than 16: When looking for income get even stingier.
• Total return potential: Earnings growth plus dividend yield is at least 7 percent.


 
 2. Choose from
ALL STOCKS
- OR -
SIVY 100

Sivy 100 companies have already passed strict financial tests. When prospecting among all companies, we limit the search to those with at least $5 billion in revenue and $5 billion in market capitalization.

 
 3. Run search


There is one constant through all three approaches: We always want healthy earnings growth -- and we never want to pay too much for it. To see how much you're paying for growth, compare the P/E ratio with the projected long-term growth rate, to arrive at a PEG (Price/Earnings Growth) ratio. We didn't want any companies trading at more than twice their growth rates (a P/E of 40 for shares in a company growing 20 percent) -- thus the maximum PEG is 2.0.

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