Researching which stocks to invest in is a process that typically varies quite a bit from person-to-person.
Some people prefer to use charting and technical analysis to plan their trades, while others use fundamental analysis to invest in companies for the long-term.
At the same time, many other investors follow neither of these strategies. Instead, they simply rely on hot stock tips from their friends or just go with their gut.
While this kind of strategy may work occasionally, it's rare that intuition leads to long-term success in the stock market. Top investors like Warren Buffet know that it's important to do significant research before buying a company's stock.
However, for many investors, this research process is intimidating. They're not sure what they should be looking for and the abundance of information about a single company can quickly become overwhelming. For this reason, they decide to do nothing and just go with their gut.
Fortunately, it's 2021 and there is an abundance of tools that can help investors to quickly analyze and compare hundreds of stocks at once. Based on the criteria that matter to you, you can quickly find potential investments within the sea of stocks out there.
One of the most promising tools for this purpose is Front.
This review was sponsored by Front.
Front is a free tool for researching individual stocks. The platform has an algorithm that assigns each stock a FISCO score based on the risk and return potential.
In addition, you are able to sync your investment accounts and Front will customize the FISCO algorithm for you. This allows you to quickly find stocks to add to your portfolio.
The beginner-friendly interface is similar to the sleek and smooth design that Robinhood popularized.
Launched in early 2020, Front is an app that allows investors to make data-driven investment decisions without needing a degree in finance. With the abundance of information that can be found about a single stock online, many investors get overwhelmed and give up on research.
Front wanted to solve this issue, so they found a way to boil down the fundamentals of a stock into a single number. This number takes into account factors like the financials of the company, current news around the company, and how well it fits in your portfolio.
After downloading the Front app, you are able to sync all of your financial accounts to the platform. This allows Front to pull in data on all of your investments and analyze your portfolio as a whole.
This process is done securely via Plaid, the industry standard for financial institutions, and gives Front read-only access to your investments.
From there, the platform generates FISCO scores for each of your individual investments and then for your portfolio as a whole. You can use these to evaluate your existing investments and determine which are a good fit and which might be worth replacing.
You're then able to take advantage of their smart recommendations section to find potential investments with high FISCO scores. These are customized based on which stocks could fit best within your particular portfolio.
If you decide you want to purchase any of these investments, you will do so through one of your linked brokerage accounts. Currently, Front does not offer the ability to purchase stocks directly through their platform. They solely serve as the place to do your research.
The FISCO score is the cornerstone of Front and where much of the value in the platform lies. FISCO stands for Front Investment Score and quantifies the fundamentals of a company into a single score.
It is in many ways modeled after your FICO score which is a type of credit score. Both scores range from 300 - 850 and the higher the score, the better.
Currently, there are 5 criteria that go into creating a FISCO score for a stock.
Performance - This is a measure of the stock's performance relative to other similar stocks and indexes over the last 3 months.
News - Front's AI scans through news stories to determine the overall sentiment for a company at the moment.
Financials - This quantifies the financial health of a company based on their balance sheet and income statement.
Predictive Models - Front runs analysis on the potential future risks and returns of the stock.
Compatibility - This is customized based on how well the investment fits in your specific portfolio.
These 5 variables are quantified and boiled down to a single score you can use to compare different investments. The FISCO score takes into account both the risk and reward potential for investments and allows you to quickly tell which are worth pursuing and which you're better off ignoring.
By comparing FISCO scores between stocks, it's much easier to tell which investments have the ratio of risk to return that best suits your portfolio.
Once your investment accounts are synced with Front, their AI will be able to start providing opportunities to look into. These will be based on your existing portfolio and will complement the stocks that you already own.
You can view these on your home screen along with the top movers for the day and a feed of news stories related to the companies in your portfolio. A big advantage that the Front app has is that so much of the app is personalized for you.
One feature unique to Front is the interface for exploring new stocks. Instead of just providing you with a list of stocks to look through, Front allows you to swipe through stocks to indicate whether you are interested in them or not.
This feature was initially popularized by dating apps like Tinder, but has now been incorporated into Finance apps like Front. For younger investors, this familiar interface may be easier to use than many of the confusing setups more technical apps typically offer.
By creating such a simple interface for exploring new investments, it is clear that Front is prioritizing accessibility for newer investors. The user experience in many ways is similar to that of Robinhood, simple and sleek.
All in all, the Front app can be an effective tool for beginner and intermediate stock market investors. That's because it can help dramatically shorten the research process. With all of the information that is out there, it's no wonder that many beginners skip the research step entirely.
However, when all of the research can be boiled down to a single, personalized number, things get a lot easier for investors.
By creating the FISCO score as a single metric for the risk and return profile of a stock, Front significantly simplifies the investing process. Seeing a single score that wraps in all of the fundamentals of a company is a big value-add for DIY investors that don't want to spend hours on investigating different stocks.
On top of that, the ability to see all of your investments in one place and receive a portfolio-wide FISCO score goes a long way to show you where your investments are currently at.
Plus, Front is completely free to use, so for many investors, it just makes sense to give it a try. You can give it a shot and see whether it ends up saving you time and improving your investing.