How to find good stocks: 3 simple screens to avoid bad businesses

Investment in the stock market works best if you follow one simple rule: Avoid bad businesses. Even a few shares that make loss can harm your portfolio returns. The good news is that you do not need complicated strategies to protect yourself. Using a stock screen helps you quickly filter out poor businesses and focus on the right focus. Of the available options, Finology Ticker is considered one of the best stock scorers in India. This allows you to apply ready -made filters in 5,000+ listed businesses, enabling you to identify quality businesses within minutes. Instead of following the noise of the market, you can use a systematic process. Here are three simple yet powerful screening queries that you can perform directly on the screen of the Finology Ticker to improve your stock selection. 1. The Cash Flow Test: Checking whether profits are on paper gains on paper does not always mean profits. A company can report high earnings, but cannot earn real cash. This is a significant warning sign. To avoid such cases, filter companies that consistently show positive profits and cash flow. Screening Query (paste in Finology -ticker Screener): CFO Y1> 0 and CFO Y2> 0 and CFO Y3> 0 and FCFF 3YR AVG> 0 and FCFF 3YR CAch> 8 and Operating Margin Q1> 10 and GPM Y1> GPM Y2 and Net Profit Q1> Only Profit Marry Prior to its collapse, DHFL reported a profit of over £ 1,900 crore in FY18, but the cash flow was negative. This mismatch was a big red flag. Managing this screen on Finology Ticker could have highlighted the risk early. Finology Research Desk 2. The Promoter Trust Filter: Follow the logical promoters or founders of the skin-in-the-game that best knows their business. If they have a significant interest and do not keep it, it shows strong confidence in the future of the business. On the other hand, high promoting nutrition is linked to corporate failures. Sifting Query (paste in the Finology Ticker Screener): Promotor Holding Q1> Promoter Holding Q2 and Promotor Holding Q1> 50 and Promoter BelleTging Q1 1 and ROCE 5YR AVG> 20 and debt to equity Y1 1.5 and interest coding Y1> 3 why it works: In contrast, companies such as Future Retail and Cox & Kings had great promise, which later became in trouble. In Q3FY25, Steel Exchange India raised the promoter promise from ~ 61% to ~ 86% in just one quarter. NRB bearers reported that they promised about 91%, and the stock dropped ~ 28%in the same period (the latest promise of NRB bearings dropped to ~ 66%). Even large companies such as Indusind Bank saw an increase in ~ 5.4% in December 2024. It is precisely the red flags that this filter is designed to catch. On the plus side, some businesses make an effort to clean up. For example, Bharat Forge reduced the promise from ~ 7.1% to almost 0% between Q3 FY24 and Q4 FY24. Such actions usually send a strong positive signal to investors. With the best stock screen, such as Finology Ticker, you can find this changes quarterly by term without digging by reports. Finology Research Desk 3. The Return Relationship Power Screen: Focus on high-efficiency enterprises Return relationships, such as Roe (Return on Equity) and Roce (return on capital employed), indicate how effectively a business uses its resources. High and consistent returns often indicate strong businesses. Screening Query (paste in Finology -ticker Screener): Roe 5yr AVG> 20 and ROCE 5YR AVG> 25 and ROA 5YR AVG> 15 and MCAP> 1000 and debt to equity y1 1 1 and interest cover Y1> 1 and net profit 5yr CAgr> 12 and net sales 5yr CAgr> 15 why it works: Pidilite has maintained historically. If you run this screen on Finology Ticker, you can help such capital -efficient businesses directly. Finology -Research Country Slimmer Stock selection with a Screener Good Investing is about following a process, not tips. Using these three ready-to-use inquiries on the Finology Ticker Screener, you can: eliminate companies with poor cash flow. Avoid businesses where promoters do not have confidence. Find consistent wealth creators with high yield ratios. This approach is systematic, data-driven and repeatable. That’s why many investors call Finology Ticker the best stock counter in India. If you are serious about avoiding bad businesses and focusing on strong businesses, today start using these screens. The best thing is that you can manage it on Finology Ticker’s Screener for free and get a list of matching stocks immediately. Finology is a SEBI registered investment advisor firm with registration number: ina000012218. Disclaimer: The views and recommendations above are those of individual analysts or brokerage companies, and not of currency. We advise investors to check with certified experts before making investment decisions.