How To Buy Stocks With Finviz Stock Screener Guidance

Investing in the stock market can feel overwhelming, especially for beginners. Where do you even start finding promising companies? That's where a stock screener like Finviz comes in. Finviz is a powerful, free (with a paid option) tool that allows you to filter stocks based on a wide range of criteria, helping you narrow down your search and identify potential investment opportunities. This guide will walk you through how to use Finviz effectively to find stocks that align with your investment strategy and ultimately, how to buy them.

Think of Finviz as your personal stock market research assistant. Instead of sifting through thousands of companies manually, you can use its filters to focus on stocks that meet your specific requirements, whether you're looking for value stocks, growth stocks, dividend payers, or something else entirely. This guide will equip you with the knowledge to navigate Finviz and make informed investment decisions.

Let's dive in and learn how to use Finviz to find and buy stocks!

1. Understanding the Finviz Interface

Before you start screening, familiarize yourself with the Finviz website (finviz.com). The homepage provides a broad overview of the market, including heatmaps, news, and top gainers/losers. However, the real power lies in the "Screener" tab.

  • Descriptive Tab: This is where you'll find the most common and widely used filters.
  • Fundamental Tab: This tab focuses on financial ratios and metrics like P/E ratio, EPS growth, and debt-to-equity ratio.
  • Technical Tab: This tab allows you to filter stocks based on technical indicators like moving averages, RSI, and MACD.
  • All: This tab combines all the filters from the other tabs, giving you maximum control.

2. Defining Your Investment Strategy

Before you start tinkering with filters, it's crucial to define your investment strategy. What are you looking for in a stock? Are you a value investor seeking undervalued companies? A growth investor looking for high-growth potential? Or a dividend investor seeking income-generating stocks?

Knowing your strategy will guide your filter choices. For example:

  • Value Investing: Focus on low P/E ratios, low Price/Book ratios, and strong balance sheets.
  • Growth Investing: Look for high EPS growth, high revenue growth, and innovative companies.
  • Dividend Investing: Filter for high dividend yields, low payout ratios, and a history of consistent dividend payments.

3. Setting Up Your Finviz Stock Screener

Now that you have a strategy in mind, it's time to set up your Finviz screener. Let's walk through an example of how to find potential value stocks:

  • Go to the "Screener" tab on Finviz.
  • Select the "Fundamental" tab.
  • Set the following filters:
    • P/E Ratio: Under 15 (indicates a potentially undervalued stock)
    • Price/Book Ratio: Under 2 (another indicator of potential undervaluation)
    • Debt/Equity Ratio: Under 1 (suggests a relatively healthy balance sheet)
    • EPS Growth Next 5 Years: Over 10% (indicates future growth potential, even for a value stock)
  • Consider adding market cap filters. Depending on your risk tolerance, you might filter for "Large," "Mid," or "Small" cap stocks. Larger companies tend to be more stable, while smaller companies offer potentially higher growth but also higher risk.

4. Analyzing the Results

After applying your filters, Finviz will display a list of stocks that meet your criteria. Don't just blindly buy the first stock on the list! This is where your research begins.

  • Review the key metrics: Look at the company's financials, growth rates, and profitability.
  • Read company news and SEC filings: Understand what the company does, its competitive landscape, and any potential risks.
  • Consider the industry: Is the industry growing or declining? Is the company a leader in its industry?
  • Look at the chart: While Finviz is primarily a fundamental screener, a quick glance at the chart can reveal potential trends. Is the stock in an uptrend or downtrend? Is it trading near its 52-week high or low?

5. Refining Your Search

Don't be afraid to adjust your filters and refine your search. The initial results might not be perfect, and you may need to tweak your criteria to find the best opportunities.

  • Loosen or tighten filters: If you're getting too few or too many results, adjust your filters accordingly.
  • Experiment with different filters: Try adding or removing filters to see how it affects the results.
  • Use the "Signal" filter: This filter can highlight stocks with specific patterns, such as "Top Gainers," "New Highs," or "Unusual Volume."

6. Setting Up Alerts

Finviz offers a portfolio and alert feature (requires registration). You can add stocks to your portfolio and set up alerts to be notified of price changes, news, or other events. This can help you stay on top of your investments and react quickly to market changes.

7. Choosing a Broker and Placing Your Order

Once you've identified a stock you want to buy, you'll need a brokerage account. Many online brokers offer commission-free trading, making it easier and more affordable to invest. Popular options include:

  • Fidelity
  • Charles Schwab
  • TD Ameritrade
  • Robinhood

After opening an account, you can fund it and place your order.

  • Select the stock: Enter the stock's ticker symbol.
  • Choose your order type:
    • Market order: Buys the stock at the current market price.
    • Limit order: Buys the stock only if it reaches a specific price.
  • Enter the quantity: Specify how many shares you want to buy.
  • Review and submit your order.

8. Risk Management and Diversification

Investing in the stock market involves risk. It's crucial to manage your risk by:

  • Diversifying your portfolio: Don't put all your eggs in one basket. Invest in a variety of stocks across different industries.
  • Setting stop-loss orders: A stop-loss order automatically sells your stock if it falls below a certain price, limiting your potential losses.
  • Investing for the long term: Don't try to time the market. Focus on long-term growth and avoid making emotional decisions based on short-term market fluctuations.
  • Only investing what you can afford to lose: The stock market can be volatile. Never invest money you need for essential expenses.

Common Mistakes to Avoid

  • Chasing hot stocks: Avoid buying stocks solely based on hype or recent price increases.
  • Ignoring fundamentals: Don't rely solely on technical indicators. Always analyze the company's financials and business model.
  • Being afraid to sell: Don't hold onto losing stocks indefinitely. Cut your losses and move on.
  • Overtrading: Frequent trading can lead to higher transaction costs and lower returns.

Conclusion

Finviz is a powerful tool that can significantly simplify the stock screening process. By understanding its features, defining your investment strategy, and conducting thorough research, you can use Finviz to find promising stocks and build a successful investment portfolio. Remember to manage your risk, diversify your holdings, and invest for the long term. Happy investing!