Joel Greenblatt's magic formula has proven to be one of most popular and successful quantitative screens. By finding stocks with better than average return characteristics selling for below average prices, the screen has proven its ability to outperform the market.
However, the screen has one blind spot — stocks with a market cap under $50 million.
The magic formula newsletter aims to take advantage of this blind spot and find small companies with great business models trading for outstanding prices.
This month’s pick is generating returns on assets over 40% despite a balance sheet loaded with excess cash. They’re a market leader with a great reputation and significant competitive advantages, and management is committed to returning cash to shareholders through a nice dividend program.
The company trades for a discount to its competitors despite employing a better balance sheet and enjoying better returns on capital. The industry is also very acquisitive, and a competitor could make an acquisition at a significant premium to today’s prices and still find the acquisition very accretive.
Download the September 2011 Issue of Micro-Cap Magic Formula Newsletter.
We will buy this stock on Monday.
GuruFocus publishes three monthly newsletters. These are the links of the other two newsletters:
Download the latest August issue of Ben Graham Net-Current Asset Bargains newsletter.
Premium Membership is required to access these letters. If you are not a Premium Member, take a 7-Day Free trial.
However, the screen has one blind spot — stocks with a market cap under $50 million.
The magic formula newsletter aims to take advantage of this blind spot and find small companies with great business models trading for outstanding prices.
This month’s pick is generating returns on assets over 40% despite a balance sheet loaded with excess cash. They’re a market leader with a great reputation and significant competitive advantages, and management is committed to returning cash to shareholders through a nice dividend program.
The company trades for a discount to its competitors despite employing a better balance sheet and enjoying better returns on capital. The industry is also very acquisitive, and a competitor could make an acquisition at a significant premium to today’s prices and still find the acquisition very accretive.
Download the September 2011 Issue of Micro-Cap Magic Formula Newsletter.
We will buy this stock on Monday.
GuruFocus publishes three monthly newsletters. These are the links of the other two newsletters:
Download the latest August issue of Ben Graham Net-Current Asset Bargains newsletter.
Premium Membership is required to access these letters. If you are not a Premium Member, take a 7-Day Free trial.
