The “Magic Formula” in investing is a strategy introduced by investor and author Joel Greenblatt in his book The Little Book That Still Beats the Market. The Magic Formula is designed to identify high-quality companies undervalued by the market.
This Scan consists of stocks with lower PE and High ROCE ratios. This scan aims to figure out good companies at lower valuations.
| Stock | PE | ROCE (%) |
|---|---|---|
| Mishtann Foods | 4.34 | 88.74 |
| Coal India | 7.46 | 63.59 |
| Key Corp | 2.43 | 57.25 |
| Goenka Business | 6.75 | 48.09 |
| Visco Trade | 5.26 | 29.27 |
| Swastika Investmart | 14.31 | 28.53 |
| JMJ Fintech | 7.62 | 22.66 |
| LKP Finance | 4.43 | 18.17 |
| SMC Global | 7.02 | 17.99 |
| Bombay Oxygen | 6.69 | 17.66 |
Key Points:
- The idea behind the Magic Formula is that by focusing on companies with a high return on capital and low valuation (high earnings yield), you’re more likely to find companies that are undervalued and have a high potential for future growth.
- The formula is based on a value-investing approach, but it uses quantitative rules to make it easier for investors to follow and execute.
- The strategy generally focuses on buying stocks with good long-term potential and holding them for a year, ignoring short-term market fluctuations.
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