Penny stocks are a form of low priced stocks where each stock can cost less than a dollar. Nearly all professional money managers do not beat the broad market. The majority of mutual fund managers actually make poor performance in the long and short term.   

A variety of reasons can be taken into account that is responsible for it, the main one being human nature. Investment decisions should always be based on the most important facts. Therefore a good way to invest in penny stocks is to use stock screener. With this you can find potential companies in which you want to invest in. It’s a very popular and helpful tool and any investor should use it.

Making a mechanical stock screening model needs more labor. However, it allows investors to apply the identical stock selection process, repeatedly, that focuses only on the most important variables, every time they are about to buy or sell penny stocks.   

After the designing of stock screen model (i.e. all the variables have been chosen), the investor can verify which penny stocks meets the criteria with a single  click by using an inexpensive stock screening software or free tools on the internet (such as MSN’s Stock Screener). Many stock screeners can analyze thousands of penny stocks in seconds.

Screeners have many options. There are different parameters you can put in for your search such as share price, trading volume, market capitalization, p/e ratio, among many others.

The screeners also reveal the exchange they trade on and the industry that they are in. If for example you want to trade in companies that are similar to Microsoft, you can submit parameters into your stock screener that will illustrate you other companies out there that are comparable to Microsoft. You set up the screener with ranges close to what Microsoft has. This includes the share price it is currently at, the volume it trades per day, the industry that it’s in, and the exchange it’s on.

Besides you can also try to find low p/e oil companies or large cap dividend companies using a screener.

In conclusion it can be said that a screener can make research work in few seconds that a research team takes weeks to complete.

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