IFB22: Finding Investment Ideas with a Reliable Stock Screener

Welcome to session 22 of the Investing for Beginners podcast. In today’s session we are going to discuss how Andrew and I like to use a stock screener. Our stock screener of choice is finviz.com, this is a free screener that we use to help us find all kinds of great stocks to invest in. It is super easy to use and very flexible as well, great for beginners as wells as more experienced investors.
Andrew has a great ebook that we have discussed several times that has some great insights into how to screen for great stock ideas. It has been foundational to me to help me set up my Monday morning ritual to screen for stocks.

* How to use finviz.com
* What are the best metrics to use for a screen
* How to be flexible with your screening procedures
* Finding new investment ideas using a stock screener
* Remembering that stock screeners are just a tool

 
Andrew: Well, I guess we have different rituals because mine is to hit the snooze button multiple times in the morning. A screen is a great way to get some ideas, my site is focused on beginners, and I used to get this question all the time.
I’ve written blog posts about this question, and it’s a valid question and something that always pops up, and it’s a struggling point for a lot of beginners. Where do I get ideas for stocks? I might have this toolkit, ability to sift through the financial data and find an intrinsic value and search for a margin of safety.
There are so many stocks out there, so many annual reports and there are thousands of words in these annual reports, too much data, too many companies, too many options. So how do we narrow that down and a stock screener is the best way to do it.
There are a couple of different screeners that you can use. The one that I prefer is called finviz.com; you can type it in to follow along with us while we are doing it together. I won’t go through this blow by blow, but I will give some commentary along the way to help guide you along.
I pull finviz.com, and right away there are 7094 stocks, it is a great start. This particular screener focuses primarily on the US stocks; it does have stocks from other countries. For example, there is France, which all of are traded on the NASDAQ.
It has this tilt towards the US where even if it’s a company based in a different country, it’s going to be traded on a US exchange, either NASDAQ or such. This makes it simple for me because I am obviously focusing on US stocks, all American all the way.
I have seen UK screeners, which some readers of mine have suggested I look into, these can allow you to do some basic research and figure out how that relates to your situation.
Something that I like to do right away, because I am all American I just straight off the bat go to the drop down where it says country and me set it to the USA. We’ve talked about that in the past, makes taxes simpler, and I think they are the company to own and have been for the past couple hundred years.
That narrows it down to about 6200, the next one I like to look at is a market cap, and this is something that we can kind of debate a little bit. There is a lot of different ideas, generally when you hear about the blue-chip stocks, big business stocks or the ones that they talk about in the media.
They are talking about these stocks that have market capitalizations of $200 Billion plus, think stocks like Microsoft, Google, Johnson & Johnson, any of these strong and steady stocks. That is the range, and then it goes kindly varies.
The range goes down to $2 Billion to $500 million, my range that I like to use and I stick to this probably 90% of the time. It’s going to be $2 Billion or above, the way that I look at it, and if you look at my eLetter portfolio.
I just wrote an email about this the other day; I on...