You can find bargains by looking for falling stocks that have the potential for a rebound. Online stock screeners can help you find such stocks. A screener works only as well as the information you enter into it. You won't find a way to enter the term "falling stocks," but you can enter terms that will get you the results you need. That will give you a list of stocks to choose from.
Select "custom screen" on the screener. This will be necessary for a contrarian investor looking for stocks that are falling when most people want stocks that are rising, It will allow you to bypass the screening program's own selections.
Choose "performance" as your main selection criteria. This term may appear in a drop-down window. If you don't see this exact word, you may see something like "change in price" or "trend." This will help you avoid considerations such as "analyst estimates," "financial strength" and "dividends," to give a few examples. You are interested in the stock's recent performance, which refers to the price of the stock.
Highlight or click "percentage change" or a similar phrase, such as "recent price changes." When you look for falling stocks, you are not looking for stocks that are merely declining in price. A decline can be gradual. You need a stock that has shown dramatic changes in a short time. You can choose the length of time for the percentage change. For example, you can choose to see stocks with the greatest percentage change for one month, three months or a year.
Screen your screen. The results will show stocks that have gone up the greatest percentage and stocks that have fallen the greatest percentage. Typically, stocks that have fallen will show the percentage with a negative sign in front of it and the numbers written in red. These are your candidates to research further.
- After you get the results from your screen, look at the chart for each stock. Sometimes a chart can can help you understand the context for the stock's recent fall. For example, you can check to see if it is falling from a recent high or if it is hitting all-time lows.
- Stocks that fall are not automatically bargains. You should check to see what kind of shape the company that issues the stock is in.
Kevin Johnston writes for Ameriprise Financial, the Rutgers University MBA Program and Evan Carmichael. He has written about business, marketing, finance, sales and investing for publications such as "The New York Daily News," "Business Age" and "Nation's Business." He is an instructional designer with credits for companies such as ADP, Standard and Poor's and Bank of America.