Zacks.com featured expert Kevin Matras highlights: American Eagle Outfitters, Amerisafe and Bio-Imaging Technologies.

CHICAGO -- Kevin Matras explains the importance of Screening and Backtesting. Find out how to increase your odds for success. Stocks in this week's article are American Eagle Outfitters, Inc. (NASDAQ: AEOS), Amerisafe, Inc. (NASDAQ: AMSF) and Bio-Imaging Technologies, Inc. (NASDAQ: BITI). Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=109

Screen of the Week written by Kevin Matras of Zacks Investment Research:

Every week, I either outline a unique way to screen for stocks or go over a proven, profitable trading strategy. But in this week's article, I'm starting at square one and going over why screening is so crucial. Even more importantly, I'll go over why backtesting is the most important step of all.

Why Should I Use a Stock Screener?

Other than buying stocks that are talked about on TV or written about in the paper (not to mention 'tips' from friends), how else are you going to find stocks that meet certain fundamental characteristics?

Even if you don't use a screener now, most people still do their own 'screening' one way or another. For example, they may hear that a stock has a certain Growth Rate, or a certain P/E Ratio or Sales Surprise. They then find themselves listening for or reading about stocks that meet these criteria.

Well, if you want to find stocks that meet certain criteria, you can find them quickly and easily with a stock screener.

However, just because you narrow down 10,000 stocks to only a handful, doesn't necessarily mean that you've picked the best stocks on the planet. You might have picked the worst ones. But how will you know?

Backtesting!

Once you've created a screen, you can then backtest it to see how good (or bad) your screening strategy has performed. In other words, does your screen generally find stocks that go up once they've been identified? Or does your screen generally find stocks that get buried? This is good stuff to know.

With backtesting, you can see how successful your stock-picking strategy has performed in the past, so you'll have a better idea as to what your probability of success will be now and in the future.

Of course, past performance is no guarantee of future results, but what else do you have to go by? Think about it; if you saw that a stock-picking strategy did nothing but lose money year after year, period after period, stock after stock, over and over again; then there's NO WAY you'd want to trade that strategy or use that screen to pick stocks. Sure, it may turn around and start picking winners, but it may also continue to pick losing stocks the way it always has.

On the other hand, what if you saw a strategy that did great year after year, period after period, etc.? You'd of course want to trade that strategy. And while it may start picking losers all of a sudden, it may also continue picking winning stocks, just like it had been doing over and over before.

Keep in mind, a screening and backtesting program isn't a 'box of magic'. But it's a great way to see what works and what doesn't BEFORE you put your money at risk!

Don't get me wrong; just because you have a great strategy for picking winning stocks, it isn't going to preclude you from ever having another loser. But if your strategy picks winners far more often than losers, you can feel confident that your next pick will have a high probability of success. And don't be the guy who 'accidentally' gets into one or two good stocks and thinks he's the next Warren Buffet. If your stock account is important to you, test your stock-picking strategies to see if your method for finding winners is a repeatable one.

And that's why someone should use a Screener and a Backtester.

As usual, I'll close with a few new picks from some of my favorite backtested screening strategies for the week of 1/2/07:

AEOS  <  <

American Eagle Outfitters, Inc.
      <  <

(from the EPS Growth Past and Present screen)
      <  <


AMSF  <  <

Amerisafe, Inc.
      <  <

(from the ROE2 screen)
      <  <


BITI  <  <

Bio-Imaging Technologies, Inc.
      <  <

(from the Breakouts screen)

Sign up now for your two-week free trial to the Research Wizard and take your stock screening to another level. And when you're done, backtest it to see if it works! And don't forget to check out the winning trading strategies that come loaded with the program. Know when to buy and when to sell. It's all there. You can do it. http://at.zacks.com/?id=111

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here http://at.zacks.com/?id=112

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros http://at.zacks.com/?id=113

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.