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December 07, 2010
Steve Alexander

Steve Alexander

Every so often, MagicDiligence compiles a list of Magic Formula stocks sorted by their dividend yield, price-to-sales ratio, and price-to-book ratio for investors that like to use those metrics. The result is a list of attractive value stocks for additional research. Here are the top 10 in each of the three metrics listed above:Dividend Yield

Dividend yield is a favorite metric for income investors, providing both steady, predictable returns and downside protection. With Magic Formula Investing, you are also buying dividend stocks that are both cheap against earnings and represent a company that efficiently invests capital. The Top 10 Magic Formula highest dividend yield stocks (forward yield) right now are:

1) 7.0% - EarthLink Inc (ELNK)

2) 6.4% - Altria Group Inc (MO)

3) 6.1% - Reynolds American Inc (RAI)

4) 5.9% - United Online Inc (UNTD)

5) 5.6% - Value Line Inc (VALU)MD-Star-Shadow-12px.jpg

6) 5.5% - Lorillard Inc (LO)

7) 4.7% - Garmin Ltd (GRMN)

8) 4.6% - Block (H&R) Inc. (HRB)MD-Star-Shadow-12px.jpg

9) 4.5% - Deluxe Corp (DLX)

10) 4.3% - Lockheed Martin Corp (LMT)

Price-to-Sales Ratio

Using the price-to-sales ratio was a tactic shown to be highly successful by such guru investors as Ken Fisher in Super Stocksir?t=magicdi05-20&l=as2&o=1&a=0071499814and by James O'Shaughnessy in What Works on Wall Street. The Top 10 Magic Formula stocks with lowest price-to-sales ratios are:

1) 0.11 - AmerisourceBergen Corp (ABC)

2) 0.15 - McKesson Corp (MCK)

3) 0.16 - Eastman Kodak Co (EK)

4) 0.24 - Unisys Corp (UIS)

5) 0.26 - Providence Service Corp (The) (PRSC)MD-Star-Shadow-12px.jpg

6) 0.29 - Oshkosh Corp (OSK)

7) 0.35 - GameStop Corp. (GME)MD-Star-Shadow-12px.jpg

8) 0.36 - EMCOR Group Inc. (EME)MD-Star-Shadow-12px.jpg

9) 0.46 - Dell, Inc. (DELL)MD-Star-Shadow-12px.jpg

10) 0.49 - Amedisys Inc (AMED)MD-Star-Shadow-12px.jpg

Price-to-Book Ratio

Finally, the price-to-book ratio is often considered the "classic" test of value investing: are you buying a company at or less than the net value of its assets? Price-to-book ratio was a favorite of the "father" of value investing, Ben Graham. The top 10 Magic Formula stocks with lowest price-to-book ratio are:

1) 0.51 - Jiangbo Pharmaceuticals Inc (JGBO)

2) 0.92 - Amedisys Inc (AMED)MD-Star-Shadow-12px.jpg

3) 1.03 - Time Warner Inc (TWX)

4) 1.17 - GameStop Corp. (GME)MD-Star-Shadow-12px.jpg

5) 1.21 - AOL Inc (AOL)MD-Star-Shadow-12px.jpg

6) 1.25 - Comtech Telecommunications Corp. (CMTL)

7) 1.26 - Argan Inc (AGX)

8) 1.27 - EarthLink Inc (ELNK)

9) 1.29 - Motorcar Parts of America Inc (MPAA)

10) 1.31 - United Online Inc (UNTD)

Disclosure: Steve owns GME

Steve Alexander


Rating: 3.4/5 (5 votes)


Toddius - 4 years ago
I don't see a key - what do the stars denote.
Paulwitt - 4 years ago
I am long OSK based on value. Heads up - the last two days it has made decent moves up on good volume.

For book value a lot of the banks are under 1.0. That's where I parked some $ :)

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