As the coronavirus spreads and shares fall, we have launched new parameters to help users navigate the bear market and find the best bargains. These new screener parameters are currently free for all users:
Buy Zone: Stocks that trade above their current Price to Earnings (PE) or Price to Book Value (P/BV) at least 75% of the time (in trading days)
Sell Zone: Stocks that trade below their current PE or P/BV at least 75% of the time (in trading days)
Neutral Zone: Stocks that trade at their current PE or P/BV most of the time (in trading days)
How are these useful?
Price to Earnings (PE) and Price to Book Value (P/BV) are valuation numbers widely used to check whether stocks are cheap or expensive at their current prices. There are 3 ways to compare these valuation ratios:
1. Compare with peers in the same industry, as is available in the peer group section of fundamental pages.
2. Compare present value with averages. For example, this screener on Trendlyne chooses stocks which are trading below their 3Yr, 5Yr and 10Yr PE averages.
3. However, experts recommed looking at how many days the stock trades above or below a certain valuation. The frequency distribution of the valuation helps investors put money in a stock only when the stock is in the buy zone of the distribution. So if the stock trades only 10% of days below the current value of PE or P/BV, then it is in the Buy Zone.
If you prefer, you can customize this further and narrow the buy/sell window using the following parameters :
%Days traded below current PE Price to Earnings (example query: %Days traded below current PE Price to Earnings < 20)
%Days traded below current Price to Book Value (example query: %Days traded below current Price to Book Value < 20)
Keep in mind that markets may continue to fall further on coronavirus news, and prices may not find their bottom for a while.
Stay safe in volatile markets.