Keep things simple
Technical screens won’t provide too much help for our long-term strategy of investing into value stocks. You might find more valuable to set them up when looking into day-trading.
Video walkthrough of screener settings
Watch the video below to learn how to find good dividend stocks with the free version of the Finviz screener. It mentions a number of useful tricks and explanations. Alternatively, read on for a list of the screener presets investors use the most.
Essential Finviz screener settings
The most common metrics investors screen for
Specifying the minimum market cap is useful for filtering out the small companies that are too unpredictable and staying away from giant firms that are too large to keep up a rapid pace.
It is good to eliminate any stocks that trade under $10 as they tend to be too volatile.
Volume is less significant than in case of higher frequency traders, but you still want to avoid a stock that barely trades. Look for stocks that trade with adequate trading volume to ensure that you can buy and sell easily. Your volume filter should exclude stocks that trade fewer than 300,000 shares per day.
Set your screening criteria to show you stocks that rose 5% or more during the previous month. This will eliminate stocks that are losing value. You can also set performance criteria for different time periods but always account for the current market and industry you wish to target.
Price-to-earnings ratio is one of the most important ratios. It looks at the price of the shares to earnings. However, it is crucial to compare PE ratios between companies in the same industry since different industries have different appetites for risk and their PE ratios can differ significantly. Generally, the lower the PE ratio for an industry, the better. Ideally, investors are looking for single-digit PE ratios.
Many investors prefer the price to earnings to growth ratio as it accounts for growth and is a better indicator of the future. However, be cautious when discounting an investment based on PEG as the future earnings growth rate cannot be predicted exactly. Similarly to PE ratios, the lower the PEG ratio is, the better.
Return on equity
A high return on equity signals the presence of a competitive advantage in a company. A competitive advantage helps a company to withstand competition and bring higher profits over the long-term. Look for return on equity higher than 15%.