Joel Greenblatt’s Magic Formula is an investment strategy outlined in his book “The Little Book That Beats the Market.” The formula aims to identify high-quality companies trading at attractive valuations. It focuses on two key metrics: return on capital and earnings yield. The idea is to find companies that are both profitable (high return on capital) and undervalued (high earnings yield) relative to other companies in the market.
The strategy involves ranking companies based on these two factors, then investing in the top-ranked stocks. The simplicity of the approach is part of its appeal, as it provides a systematic method for individual investors to select stocks without requiring extensive financial analysis
Here are the top 10 stocks using Validea’s strategy based on Joel Greenblatt’s Magic Formula for October of 2024.
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