Almost every free stock screener ships with the same starter filters. Price to earnings under 15. Return on equity over 15%. Debt to equity under one. It has been in print since Benjamin Graham and it is genuinely sensible.
We ran it across our universe of 975 companies, using each one's latest annual report. Forty-nine survive.
The obvious criticism of a simple screen is that it finds rubbish. It does not. Those 49 have a median return on invested capital of 17.5% against 9.8% for the universe. By the measure that tracks business quality, the screen picks well above average.
The problem is the shape of the list. Twenty-one of the forty-nine are financials. Lending and underwriting run on other people's money, so a healthy insurer naturally shows a high return on equity, and the sector has traded on low multiples for most of two decades for reasons that have nothing to do with any one company being overlooked.
Put a low-multiple filter and a high-ROE filter in the same screen and you have not built a quality filter. You have built a financials filter, and it does not say so on the label. Run it every month and act on the top names, and you are making a large sector bet you never decided to make.
The useful habit: after any screen, sort the survivors by sector before you read a single name. If one sector is half the list, the screen has a view, and it is worth knowing what that view is before you inherit it.
The whole run, sector by sector, and what the screen throws away:
https://returnolio.com/blog/the-screener-everyone-runs
Returnolio is a publisher of research, not an investment adviser. Nothing above is a recommendation to buy or sell anything; it does not know your situation.