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Magic Formula Formulator Joel Greenblatt’s Top 5 New Stock Picks

February 14, 2013 | About:

Holly LaFon

249 followers
Joel Greenblatt is author of the Magic Formula, professor at Columbia Business School and investor at Gotham Capital. He also just reported his fourth quarter 2012 portfolio. Updates include 184 new stock buys, for a 34% quarter-over-quarter turnover rate. Greenblatt’s largest new buys of the quarter art: Computer Sciences Corp. (CSC), Hillshire Brands Co. (HSH), Cubist Pharmaceuticals Inc. (CBST), Micros Systems (MCRS) and Cardinal Health Inc. (CAH).

His portfolio is almost equally weighted at the top between technology and consumer cyclical, followed by healthcare.

New Buys

Computer Sciences Corp. (CSC)

Joel Greenblatt bought 116,836 shares of Computer Sciences Corp. (CSC) for $35 per share in the fourth quarter. The stock has gained 33% already from his average purchase price.

Computer Sciences Corporation is a Nevada corporation founded in 1959 that helps businesses solve problems. It has a market cap of $7.25 billion; its shares were traded at around $47.21 with a P/E ratio of 34.7 and P/S ratio of 0.5. The dividend yield of Computer Sciences Corporation stocks is 1.7%.

In the third quarter the company reported a 2.5% year-over-year revenue increase to $3.78 billion and a net income increase to $513 million from a net loss of $1.39 billion a year previously.

CSC has a P/E of 14, P/B of 2.2 and P/S of 0.46.

Hillshire Brands Co. (HSH)

Greenblatt bought 157,532 shares of Hillshire Brands for $27 per share on average in the fourth quarter.

Hillshire Brands Co., formerly Sara Lee Corp, was organized in Baltimore, Md., in 1939. Hillshire Brands Co has a market cap of $3.99 billion; its shares were traded at around $32.41 with a P/E ratio of 55.9 and P/S ratio of 1. The dividend yield of Hillshire Brands Co stocks is 2.6%.

In the company’s first half of its fiscal 2013 sales increased 2.3% year over year to $2.03 billion, and earnings per share increased 48.6% to $1.10.

Cubist Pharmaceuticals Inc. (CBST)

Greenblatt bought 101,334 shares of Cubist Pharmaceuticals for $43 per share in the fourth quarter.

Cubist Pharmaceuticals Inc. was incorporated as a Delaware corporation in 1992. Cubist Pharmaceuticals has a market cap of $2.69 billion; its shares were traded at around $41.8 with a P/E ratio of 22.2 and P/S ratio of 3.1. Cubist Pharmaceuticals Inc. had an annual average earnings growth of 28.7% over the past five years.

Micros Systems (MCRS)

Greenblatt purchased 86,850 shares of Micros Systems (MCRS) for $45 per share on average in the fourth quarter. The company’s price in the quarter came down to its approximate price of the third quarter of 2011.

Micros Systems Inc. was incorporated in the State of Maryland in 1977 as Picos Manufacturing Inc. Micros Systems has a market cap of $3.61 billion; its shares were traded at around $45.37 with a P/E ratio of 21 and P/S ratio of 3.1. Micros Systems had an annual average earnings growth of 16.4% over the past 10 years. GuruFocus rated Micros Systems the business predictability rank of 3.5-star.

Revenue in Micros’ second quarter of 2013 increased 20% year over year to $324.5 million, and net income increased 15.2% to $44.1 million.

Cardinal Health Inc. (CAH)

Greenblatt bought 85,742 shares of Cardinal Health Inc. (CAH) for $41 per share on average in the fourth quarter.

Cardinal Health Inc. is an Ohio corporation formed in 1979. Cardinal Health has a market cap of $15.76 billion; its shares were traded at around $46.18 with a P/E ratio of 14.1 and P/S ratio of 0.2. The dividend yield of Cardinal Health stocks is 2.1%.

The company’s fiscal first quarter 2013 featured an 11% year-over-year revenue increase to $25.9 billion, and 15% net income increase to $271 million.

See Joel Greenblatt’s portfolio here. Also check out the Undervalued Stocks, Top Growth Companies and High Yield stocks of Joel Greenblatt.


Rating: 2.7/5 (3 votes)

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