The GuruFocus Magic Formula Stocks screening tool is based on the wisdom and real magic of Gotham Capital’s founder and Guru Joel Greenblatt, known for his brainchild, Magic Formula Investing.
In addition to being a hedge fund manager, Joel Greenblatt is known as a value investor and an author. He has written two investment books, The Little Book that Beats the Market and You Can Be a Stock Market Genius. He is also an adjunct professor at Columbia Business School.
Another great GuruFocus research tool, the Magic Formula Stocks screener, in essence, does instantly what could be very laborious work, that of ranking stocks for investors. It factors in predictability, market cap, earnings yield, return on capital, as well as EBITDA growth rates, P/E and yield. As in the case of People’s Insurance Company of China Property & Casualty Co. Ltd. (PPCCY), with a ROC of 17,676.90%, Greenblatt's formula shows investors the importance of utilizing return on capital (ROC), seldom reported but often needed to calculate how much an investment is able to generate based on the capital employed.
Designed to save investors time and make everyone a stock market genius, the Magic Formula Stocks screener reveals some truly magic stocks at this time:
Down 22% since January
Major Holding for AIG: People’s Insurance Company of China Property and Casualty Co. Ltd. (PPCCY)
The number one ranked Magic Formula Stock is Beijing-based PICC Property and Casualty Co. Ltd. (PPCCY), China’s largest casualty insurance company founded in 2002. American International Group (AIG) reportedly holds 19.8% of the stock, according to Wikipedia.
THE MAGIC: PPCCY has an earnings yield of 243.90%, a return on capital of 17,676.90%, and a five-year EBITDA growth rate of 265.9%. The PPCCY yield is 2.50%. It is not rated for predictability. The current share price is $27.63.
Up 5% over 12 months
Holding for Two Gurus: Calamos Asset Management Inc. (CLMS)
Calamos Asset Management (CLMS) has a market cap of $225.2 million; its shares trade at $10.97 with a P/E of 15.60 and a P/S of 0.70.
The asset management company is listed as the second top Magic Formulas stock.
THE MAGIC: CLMS has an earnings yield of 967.50%, a return on capital of 956.40%, and a five-year EBITDA growth rate of 31.4%. The CLMS yield is 4.30%. It is currently “on watch” for predictability, rated with one star out of five.
The top Guru CLMS shareholder is Jim Simons with 400,996 shares, up 119.48% from last holdings:
Mario Gabelli also holds 126,000 shares, up 14.55% from last holdings.
Up 106% over 12 months
Holding for Two Gurus: ClearOne Inc. (CLRO)
The communication equipment company is listed as the third top Magic Formulas stock.
ClearOne Inc. (CLRO) has a market cap of $75.2 million; its shares trade at $8.25 with a P/E of 2.80 and a P/S of 1.60. The current share price is $8.25.
THE MAGIC: CLRO has an earnings yield of 133%, a return on capital of 1,594.90%, and a five-year EBITDA growth rate of 104.5%. The CLRO yield is 0%. It is rated a one star out of five for predictability.
The top Guru CLRO shareholder is Chuck Royce for 669,284 shares:
Jim Simons also holds 45,500 shares, up 17,88% from last holdings.
Read more to find out if ClearOne’s future is a little blurry.
Here’s more info about the portfolio of Joel Greenblatt.
1. Joel Greenblatt's Undervalued Stocks
2. Joel Greenblatt's Top Growth Companies
3. Joel Greenblatt's High Yield stocks
4. Stocks that Joel Greenblatt keeps buying
Next time you hit the dog days of summer, check out the GuruFocus Magic Formula Stocks screener.
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Check out the GuruFocus special feature 52-week low screener to help you find stocks hitting new lows but are still held by top investor Gurus and Insiders. Researching these stocks may help you find deep valued stocks.