How To Make Money Using Finviz Stock Screener (Halal Stocks Only)

Investing in the stock market can be a powerful way to grow your wealth, but for Muslims, it's crucial to ensure that investments align with Sharia principles. This means avoiding companies involved in activities like alcohol, gambling, interest-based finance, and pork production. Finding halal stocks can seem daunting, but tools like Finviz can make the process much easier. This guide will show you how to leverage Finviz's powerful stock screening capabilities to identify potential halal investment opportunities.

Finviz is a free (with a premium option) web-based platform that offers comprehensive financial data, charts, and screening tools. While it doesn't explicitly label stocks as "halal," we can use its filters to narrow down the universe of stocks to those more likely to comply with Islamic finance principles. Remember, this screening process is a starting point. Further due diligence is always required before making any investment decisions.

Let’s dive in!

1. Understanding Halal Stock Screening Principles

Before we jump into Finviz, let's briefly review the core principles of halal stock investing. These principles are generally based on the guidelines provided by scholars and Islamic financial institutions.

  • Business Activity: The company's primary business should not be involved in prohibited activities (as mentioned above).
  • Debt Ratio: The company's debt should be within acceptable limits. A common benchmark is that total debt should not exceed 33% of total assets.
  • Interest Income: The company's income from interest-bearing accounts should be minimal. Some scholars allow a small percentage, often around 5%, of total revenue.
  • Illiquid Assets: The company should hold a sufficient amount of illiquid assets, such as property, plant, and equipment. This helps ensure the company is engaged in real economic activity.

It's important to note that these are general guidelines, and different scholars and institutions may have slightly varying interpretations. Consult with a qualified Islamic finance advisor for personalized guidance.

2. Accessing Finviz and Navigating the Screener

Go to Finviz.com. On the homepage, click on the "Screener" tab. This will take you to the stock screener interface.

The screener offers a wide range of filters categorized into Descriptive, Fundamental, Technical, and All. We'll primarily focus on the Fundamental filters to identify potential halal stocks.

3. Applying Fundamental Filters for Halal Compliance

This is where we start narrowing down the stock universe. We'll use Finviz's fundamental filters to identify companies that are more likely to be halal-compliant based on the principles discussed earlier.

  • Industry: This is where you'll start to exclude industries known to be non-compliant. For example, avoid industries like "Beverages - Brewers," "Gambling," "Tobacco," and "Banks - Regional." Be aware that some industries might require further investigation. For example, a "Food - Processing" company might produce both halal and non-halal products.

  • Debt/Equity: This is a crucial filter for halal investing. While Finviz doesn't offer a direct "Debt/Assets" ratio, we can use the "Debt/Equity" ratio as a proxy. A lower Debt/Equity ratio generally indicates a lower level of debt. A Debt/Equity ratio of less than 0.5 is a good starting point, reflecting a debt-to-asset ratio potentially below the 33% threshold. Experiment with different values to see how it affects the results.

  • Dividend Yield: While not directly related to halal compliance, many investors prefer to avoid companies with high dividend yields, as these dividends may be derived from interest income. You can set the "Dividend Yield" to "None" or a very low value (e.g., under 1%). This is a personal preference and depends on your investment strategy.

  • EPS Growth Next 5 Years: This filter can help you identify companies with strong growth potential. While not directly related to halal compliance, it's a useful metric for fundamental analysis. Set a minimum percentage growth to identify companies expected to grow.

  • Sales Growth Past 5 Years: Similar to EPS Growth, this helps identify companies with a strong track record of revenue growth.

4. Understanding Finviz Output and Further Research

After applying your filters, Finviz will display a list of companies that meet your criteria. This is where the real work begins. Don't assume that every company on the list is automatically halal-compliant.

  • Review Company Profiles: Click on each company's ticker symbol to access its detailed profile page on Finviz. This page provides information about the company's business, financials, news, and analyst ratings.

  • Visit Company Websites: Go to the company's official website and carefully review its business activities. Look for any involvement in prohibited activities. Read their annual reports and investor presentations to understand their revenue streams and debt structure.

  • Analyze Financial Statements: Examine the company's balance sheet and income statement to verify the Debt/Equity ratio and assess the level of interest income. Look for notes to the financial statements that may provide additional information about the company's activities.

  • Consult with an Islamic Finance Advisor: This is arguably the most important step. A qualified Islamic finance advisor can provide expert guidance on the halal compliance of specific stocks and help you make informed investment decisions. They can also provide insights into the nuances of Islamic finance and help you develop a Sharia-compliant investment strategy.

5. Saving Your Screener and Staying Updated

Finviz allows you to save your custom screeners. This is a valuable feature that allows you to quickly re-run your filters and monitor the list of potential halal stocks.

  • Save the Screener: After applying your filters, click on the "Save Screen" button (you may need to create a free account). Give your screener a descriptive name (e.g., "Halal Stock Screener").

  • Regularly Update the Screener: The stock market is constantly changing. Regularly update your screener to reflect new financial data and market conditions. Review the companies on your list and re-evaluate their halal compliance.

6. Beyond Finviz: Additional Resources for Halal Investing

Finviz is a powerful tool, but it's not the only resource available for halal investors. Consider exploring these additional resources:

  • Islamic Finance Institutions: Many Islamic banks and financial institutions offer Sharia-compliant investment products and services. They often have their own screening methodologies and lists of approved stocks.
  • Halal Stock Indices: Several stock indices track the performance of Sharia-compliant stocks. Examples include the Dow Jones Islamic Market World Index and the MSCI Islamic Index. These indices can provide a benchmark for your own halal investment portfolio.
  • Islamic Scholars and Experts: Consult with reputable Islamic scholars and experts in Islamic finance for guidance on halal investing. They can provide insights into the principles of Islamic finance and help you make informed investment decisions.

Conclusion: Investing with Confidence

Using Finviz to screen for potential halal stocks is a valuable first step in building a Sharia-compliant investment portfolio. By carefully applying fundamental filters and conducting thorough due diligence, you can identify companies that align with your values and have the potential for long-term growth. Remember to consult with a qualified Islamic finance advisor for personalized guidance and to stay informed about the latest developments in Islamic finance. With a combination of technology, research, and expert advice, you can invest with confidence and grow your wealth in a halal manner. Always remember that no stock screener can guarantee halal compliance; human judgement and expert consultation are crucial. Happy investing!