How To Trade Stocks Using Finviz Screener (without Interest Or Leverage)

The stock market can seem intimidating, filled with complex strategies and high-risk maneuvers. But it doesn't have to be. You can participate in the market responsibly, building a portfolio based on sound research and without resorting to borrowing money or using leverage. A powerful tool that can help you do just that is the Finviz stock screener.

Finviz is a free (with a premium option) online platform that allows you to filter stocks based on a vast array of criteria. This means you can narrow down thousands of publicly traded companies to a manageable list that fits your specific investment goals and risk tolerance. This guide will show you how to use Finviz to find stocks that align with your strategy, all while avoiding the pitfalls of interest charges and leverage.

This is about smart, sustainable investing. Let's dive in.

1. Understanding the Basics: What is a Stock Screener?

Before we jump into Finviz, let's clarify what a stock screener actually does. Think of it as a sophisticated search engine for stocks. Instead of searching for keywords, you're searching for companies that meet specific financial and technical criteria. These criteria can include things like:

  • Market Capitalization: The total value of a company's outstanding shares.
  • Price-to-Earnings Ratio (P/E): A valuation ratio that compares a company's stock price to its earnings per share.
  • Earnings Growth: The rate at which a company's earnings are increasing.
  • Dividend Yield: The percentage of a company's stock price that it pays out in dividends annually.
  • Technical Indicators: Metrics like moving averages, relative strength index (RSI), and volume.

By setting filters for these and many other criteria, you can quickly identify stocks that match your investment strategy. Finviz is particularly useful because it offers a wide range of filters and a user-friendly interface, even on its free version.

2. Accessing and Navigating Finviz

Go to www.finviz.com. The homepage provides a snapshot of the market, including news headlines, market performance, and popular stock charts. To access the screener, click on the "Screener" tab in the top navigation bar.

The Finviz screener interface is divided into three main tabs:

  • Descriptive: Allows you to filter stocks based on basic information like sector, industry, country, and market capitalization.
  • Fundamental: This is where you'll find filters based on financial ratios, profitability, debt levels, and dividend information.
  • Technical: This tab lets you filter stocks based on technical indicators, chart patterns, and moving averages.

Understanding these tabs is crucial for effectively using the screener.

3. Defining Your Investment Criteria (Without Leverage or Interest)

Before you start tinkering with the filters, it's essential to define your investment criteria. Since we're focusing on trading stocks without interest or leverage, we'll prioritize criteria that emphasize financial stability and value. Here are some examples of criteria you might consider:

  • Market Capitalization: Consider focusing on mid-cap or large-cap companies. These companies are generally more established and less volatile than small-cap stocks. A range of $2 Billion+ is a good starting point.
  • Positive Earnings: Ensure the company is profitable. In the "Fundamental" tab, look for a "Positive EPS (ttm)" filter.
  • Low Debt-to-Equity Ratio: A lower ratio indicates the company relies less on debt financing. Look for a Debt/Eq less than 1.
  • Positive Free Cash Flow: This shows the company is generating cash after accounting for capital expenditures. While Finviz doesn't directly offer a free cash flow filter, you can use other profitability metrics as a proxy.
  • Dividend Yield (Optional): If you're looking for income, consider stocks that pay dividends. A dividend yield between 2% and 5% can be a reasonable target.
  • Price-to-Earnings Ratio (P/E): A lower P/E ratio can indicate that a stock is undervalued. A P/E ratio below the industry average could be a good starting point.
  • Avoid Margin and Options: This is the most important step to avoid leverage and interest. Simply don't use them. Stick to buying shares with cash you have available.

Important Note: These are just examples. Your specific criteria will depend on your individual investment goals and risk tolerance.

4. Applying Filters in Finviz

Now, let's apply these criteria in Finviz.

  1. Start with the "Descriptive" tab: Select the market capitalization range you prefer (e.g., "Mid Cap" or "Large Cap"). You can also filter by sector or industry if you have a specific area of interest.
  2. Move to the "Fundamental" tab:
    • Set the "EPS (ttm)" filter to "Positive."
    • Set the "Debt/Eq" filter to "Under 1."
    • Set the "P/E Ratio" filter to "Under 20" (or a value you deem appropriate).
    • If desired, set the "Dividend Yield" filter to a range you find attractive.
  3. The "Technical" Tab: While not essential for value-focused investing, you can use technical indicators to refine your search. For example, you might look for stocks that are "Oversold" according to the RSI (Relative Strength Index). However, be cautious about relying too heavily on technical analysis without considering the fundamentals.

As you apply filters, the number of stocks that match your criteria will decrease. The goal is to narrow down the list to a manageable number of companies that warrant further investigation.

5. Analyzing the Results

Once you've applied your filters, Finviz will display a list of stocks that meet your criteria. Don't blindly invest in the first stock on the list. This is where the real work begins.

For each stock, click on the ticker symbol to access its detailed profile page. This page provides a wealth of information, including:

  • Financial Statements: Review the company's income statement, balance sheet, and cash flow statement.
  • News and Headlines: Stay informed about any recent developments that could impact the stock.
  • Analyst Ratings: See what analysts are saying about the stock.
  • Chart: Analyze the stock's price history and identify potential trends.

Pay close attention to the company's financials. Look for consistent revenue growth, healthy profit margins, and a strong balance sheet. Also, consider the company's competitive landscape and its long-term growth prospects.

6. Due Diligence and Risk Management

Finviz is a great starting point, but it's not a substitute for thorough due diligence. Before investing in any stock, make sure you understand the company's business model, its financial performance, and the risks it faces. Consider these points:

  • Read the Company's SEC Filings: Pay attention to the 10-K and 10-Q reports, which provide detailed information about the company's financial performance and operations.
  • Understand the Industry: Research the industry in which the company operates. Is it a growing industry? What are the key trends and challenges?
  • Assess the Management Team: Who are the key executives? Do they have a proven track record?
  • Determine Your Risk Tolerance: How much risk are you willing to take? Don't invest more than you can afford to lose.

Key to Avoiding Interest and Leverage: Only invest money you already have. Don't borrow money (margin) to buy stocks. Don't use options strategies that involve leverage. This is the simplest, most effective way to avoid the risks associated with these practices.

7. Building a Diversified Portfolio

Don't put all your eggs in one basket. Diversification is essential for managing risk. Invest in a variety of stocks across different sectors and industries. This will help to cushion your portfolio against losses if one particular stock or sector underperforms.

A good starting point is to aim for at least 10-15 different stocks in your portfolio. As your portfolio grows, you can increase the number of holdings.

8. Long-Term Investing

The goal is to build wealth over the long term. Avoid the temptation to chase short-term gains. Focus on investing in fundamentally sound companies that have the potential to grow over time.

Be patient and disciplined. Don't panic sell during market downturns. Instead, view them as opportunities to buy quality stocks at discounted prices.

Conclusion: Informed Investing with Finviz

Using the Finviz stock screener is a powerful way to identify potential investment opportunities. By defining your investment criteria, applying filters, and conducting thorough due diligence, you can build a portfolio of stocks that align with your goals and risk tolerance. Remember to stick to your strategy, avoid leverage and margin, and focus on long-term investing. With a little patience and discipline, you can achieve your financial goals without taking unnecessary risks. The key takeaway is to use Finviz as a starting point, not an ending point. Your own research and understanding of the companies you invest in are paramount to success.