Ultimate Guide To Building a Stock Portfolio With Finviz

Finviz.com is a powerful, free (with a paid premium option) web-based platform that provides a wealth of information for stock market investors. From screening stocks based on specific criteria to visualizing market trends, Finviz offers tools that can significantly streamline your research and portfolio construction process. This guide will walk you through how to leverage Finviz to build a well-rounded stock portfolio, covering everything from initial screening to in-depth analysis.

Forget spending hours sifting through endless data. Let's dive into how Finviz can become your secret weapon for building a successful investment portfolio.

1. Understanding the Finviz Interface

Before we start building a portfolio, it's crucial to understand the layout of Finviz. The homepage offers a snapshot of the market, including news, top gainers/losers, and key economic indicators. However, the real power lies within the various tabs:

  • News: Aggregates financial news from various sources. A good starting point to understand market sentiment.
  • Screener: The heart of Finviz. Allows you to filter stocks based on a multitude of fundamental and technical criteria.
  • Maps: Visualizes market performance by sector and industry.
  • Groups: Shows performance of different industry groups.
  • Portfolio: Allows you to create and track hypothetical portfolios (requires registration).
  • Futures: Provides information on futures contracts.
  • Forex: Forex information.
  • Crypto: Crypto currency information.

We will primarily focus on the Screener and Portfolio tools in this guide.

2. Defining Your Investment Goals and Risk Tolerance

Before you start screening stocks, you need to define your investment goals and risk tolerance. Are you aiming for long-term growth, dividend income, or a combination of both? What level of risk are you comfortable with? Answering these questions will guide your screening criteria and portfolio allocation.

  • Growth Investors: Might focus on companies with high revenue growth, strong earnings potential, and innovative products or services. They are often willing to accept higher volatility for potentially higher returns.
  • Value Investors: Will look for undervalued companies with strong fundamentals, such as low price-to-earnings (P/E) ratios and price-to-book (P/B) ratios. They prioritize companies that are trading below their intrinsic value.
  • Dividend Investors: Seek companies with a history of paying consistent and growing dividends. They prioritize dividend yield and payout ratio.
  • Income Investors: Focus on stocks that have a high dividend yield.

3. Using the Finviz Screener to Find Potential Investments

The Finviz screener is your primary tool for identifying stocks that align with your investment strategy. Here's a step-by-step guide:

  • Access the Screener: Click on the "Screener" tab.

  • Choose Your Filters: The screener offers three main filter categories: Descriptive, Fundamental, and Technical.

    • Descriptive: Filters based on market capitalization, sector, industry, country, etc. Start here to narrow down your universe of stocks.
    • Fundamental: Filters based on financial ratios, such as P/E, P/B, debt-to-equity, and dividend yield.
    • Technical: Filters based on technical indicators, such as moving averages, RSI, and MACD.

  • Example: Screening for Growth Stocks:

    1. Descriptive: Market Cap: Mid (> $2 Billion) or Large (> $10 Billion). Industry: Technology or Healthcare (or any sector you are interested in).
    2. Fundamental: EPS Growth Next 5 Years: Over 15%. Revenue Growth (YoY): Over 10%. Debt/Equity: Under 1.
    3. Technical: (Optional) Price above 200-day moving average (to indicate an uptrend).

  • Experiment with Filters: Don't be afraid to adjust your filters to refine your results. The more precise your filters, the more relevant your results will be.

  • Save Your Screens: Finviz allows you to save your custom screens for future use. This is a huge time-saver.

4. Analyzing Individual Stocks on Finviz

Once you have a list of potential investments from the screener, it's time to analyze each stock individually. Click on the ticker symbol to access the stock's profile page.

  • Overview: The overview tab provides a summary of the company, including key financial metrics, news headlines, and analyst ratings.
  • Chart: The chart tab displays the stock's price history and allows you to overlay technical indicators.
  • News: The news tab aggregates news articles related to the company.
  • Financials: The financials tab provides access to the company's income statement, balance sheet, and cash flow statement.
  • Insider Trading: Track insider buying and selling activity. Significant insider buying can be a positive sign.
  • Performance: This shows the stock's performance over various time periods.

Key Metrics to Consider:

  • Revenue Growth: Is the company growing its sales?
  • Earnings Growth: Is the company increasing its profitability?
  • Profit Margins: How efficiently is the company managing its costs?
  • Debt Levels: Is the company's debt manageable?
  • Cash Flow: Is the company generating sufficient cash to fund its operations and growth?
  • P/E Ratio: Is the stock trading at a reasonable valuation compared to its earnings?
  • PEG Ratio: Considers a stock's P/E ratio relative to its growth rate. A PEG ratio of 1 or less is generally considered attractive.

5. Building a Diversified Portfolio

Diversification is key to managing risk. Don't put all your eggs in one basket. A well-diversified portfolio should include stocks from different sectors, industries, and market capitalizations.

  • Sector Allocation: Allocate your investments across different sectors, such as technology, healthcare, financials, and consumer staples.
  • Industry Allocation: Within each sector, diversify across different industries.
  • Market Cap Allocation: Include a mix of large-cap, mid-cap, and small-cap stocks.
  • Number of Stocks: Aim for at least 15-20 stocks in your portfolio to achieve adequate diversification.

Using Finviz Portfolio Tool (Requires Registration):

While Finviz's portfolio tool is basic, it allows you to track hypothetical portfolios and monitor their performance. This can be useful for testing different portfolio allocations and tracking your progress.

6. Monitoring and Rebalancing Your Portfolio

Building a portfolio is not a one-time event. You need to monitor your portfolio regularly and rebalance it as needed.

  • Regular Reviews: Review your portfolio at least quarterly to assess its performance and make any necessary adjustments.
  • Rebalancing: Rebalance your portfolio to maintain your desired asset allocation. This involves selling some of your winners and buying more of your losers. This ensures you are not overly exposed to any one asset class or stock.
  • Stay Informed: Keep up-to-date on the latest news and developments related to your portfolio holdings.

7. Advanced Finviz Features (Finviz Elite - Paid)

While the free version of Finviz is powerful, Finviz Elite offers additional features that can enhance your analysis:

  • Real-time Data: Access to real-time stock quotes and charts.
  • Advanced Charts: More charting tools and indicators.
  • Backtesting: Test your trading strategies using historical data.
  • Correlation Analysis: Analyze the correlation between different stocks.
  • Export Data: Export data to spreadsheets for further analysis.

Conclusion

Finviz is an invaluable tool for building and managing a stock portfolio. By understanding its features and using them effectively, you can streamline your research, identify promising investment opportunities, and build a well-diversified portfolio that aligns with your investment goals and risk tolerance. Remember to define your goals, use the screener strategically, analyze individual stocks thoroughly, and monitor your portfolio regularly. Happy investing!