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In this blog post, you'll discover the top global Magic Formula stock picks for 2024 and learn how to enhance your investment strategy.
You'll explore how to use Joel Greenblatt's Magic Formula to identify quality companies at bargain prices and see how combining it with other ratios can increase your returns significantly. If you're looking to optimize your portfolio with proven methods, this guide will show you exactly how to do it.
Here's your guide to the top Magic Formula stock picks for 2024. We'll also dive into how to refine this strategy and seamlessly integrate the Magic Formula into your investment plan.
The best Magic Formula investing stock ideas for 2024 are grouped as follows:
- Globally
- In North America
- Across Europe
- Throughout Asia
Before we get to the investment ideas, a bit of background information.
Origin of the Magic Formula
Ever wondered about the origin of Magic Formula investing? It's the brainchild of Joel Greenblatt, unveiled in his influential book "The Little Book that Still Beats the Market." This very book sparked my journey into quantitative investing back in 2006.
What makes the Magic Formula so special? It's your key to unlocking quality companies at bargain prices.
It helps you find companies with:
- A high earnings yield (EBIT to Enterprise Value) signaling undervalued gems, and
- A robust return on invested capital (ROIC) (Trailing 12-month EBIT / ((Current assets - Current liabilities) + Net Fixed Assets)) pinpointing quality players.
To calculate the Magic Formula ranking companies are ranked based on ROIC (with 1 being the highest ROIC) and earnings yield (where 1 signals the highest earnings yield). By combining these ranks, the Magic Formula offers a unified ranking, with the top spot going to the company with the lowest Magic Formula rank – the lower, the better.
But the Magic Formula can be improved - a LOT +600%
But you can improve the returns of the original Magic Formula a lot, up to 600.5% in the back tests we have done in Europe over the 12 year period from June 1999 to June 2011.
Here are the Magic Formula only returns:
Magic Formula returns in Europe from June 1999 to June 2011 by company size.
Source: Quantitative Value Investing in Europe: What works for achieving alpha
We tested the Magic Formula with 13 other ratios
We then tested the Magic Formula with 13 other ratios and as you can see in the table below the returns of the strategy improved substantially.
Click image to enlarge
Magic Formula returns when combined with a third ratio in Europe from June 1999 to June 2011.
Source: Quantitative Value Investing in Europe: What works for achieving alpha
Look at column Q1
Look at the returns in column Q1, it shows the returns generated by first selecting the 20% best Magic Formula companies combined with the ratios in the column called Factor 2.
Best combination +783% was Momentum (a 600.5% improvement)
This means you could have earned the highest return of 783.3% over the 12 year period if you invested in the best ranked Magic Formula companies that also had the highest 6 month price index (share price momentum).
This is a 600.5% improvement over the best return of 182.8% you could have earned if you used only the Magic Formula to get investment ideas.
Now on to the investment ideas.
Click here to start finding your own Magic Formula ideas Now!
Here are the Magic Formula investment ideas for 2024
In the following stock screens you can see investment ideas generated using only the Magic Formula (Standalone Magic Formula investment ideas) as well as ideas generated using the Magic Formula combined with Price Index 6 months (6 months momentum)
Best Magic Formula investing ideas World-Wide for 2024
Magic Formula only investment ideas
This is what the screen looked like:
- All countries world-wide included
- Top 20% Magic Formula companies
- Minimum daily trading volume of $100,000
- Minimum company market value of $100 million
- Financial statements updated in the last 6 months
- Results sorted by Magic Formula from best to worse
Investment Ideas
| Name | Country | Magic Formula Rank |
|---|---|---|
| The Westaim Corporation | Canada | 5 |
| Shinnihonseiyaku Co., Ltd. | Japan | 23 |
| Yiren Digital Ltd. | China | 33 |
| Lennar Corporation | USA | 69 |
| Uniper SE | Germany | 73 |
| Mitsui Matsushima Holdings Co., Ltd. | Japan | 80 |
| GungHo Online Entertainment, Inc. | Japan | 99 |
| Azerion Group N.V. | The Netherlands | 101 |
| PetroNor E&P ASA | Norway | 113 |
| San Juan Basin Royalty Trust | USA | 114 |
| DoubleDown Interactive Co., Ltd. | South Korea | 133 |
| Spartan Delta Corp. | Canada | 136 |
| Sankyo Co., Ltd. | Japan | 139 |
| DoubleUGames Co., Ltd. | South Korea | 140 |
| Dongkuk Holdings Co.,Ltd. | South Korea | 141 |
Magic Formula combined with Price Index 6 month
This is what the screen looked like:
- All countries world-wide included
- Top 10% Magic Formula companies
- Minimum daily trading volume of $100,000
- Minimum company market value of $100 million
- Financial statements updated in the last 6 months
- Results sorted by Price Index 6 months (Momentum) from best to worse
Investment Ideas
| Name | Country | Magic Formula Rank | Price Index 6m |
|---|---|---|---|
| Sumiseki Holdings,Inc. | Japan | 285 | 3.1 |
| Virco Mfg. Corporation | USA | 1,325 | 3.0 |
| SK-Electronics CO.,LTD. | Japan | 1,580 | 2.4 |
| Alpha Metallurgical Resources, Inc. | USA | 463 | 2.4 |
| Yiren Digital Ltd. | China | 33 | 2.0 |
| 1&1 AG | Germany | 794 | 2.0 |
| Bluegreen Vacations Holding Corporation | USA | 1,518 | 2.0 |
| Humble Group AB (publ) | Sweden | 1,436 | 1.9 |
| Hibbett, Inc. | USA | 1,841 | 1.9 |
| Genie Energy Ltd. | USA | 1,482 | 1.9 |
| United Internet AG | Germany | 1,901 | 1.8 |
| Euroseas Ltd. | Greece | 707 | 1.8 |
| Semler Scientific, Inc. | USA | 1,218 | 1.8 |
| JAKKS Pacific, Inc. | USA | 1,232 | 1.8 |
| Mizuho Medy Co.,Ltd. | Japan | 204 | 1.8 |
Click here to start finding your own Magic Formula ideas Now!
Best Magic Formula investment ideas in North America for 2024
Magic Formula only investment ideas
This is what the screen looked like:
- USA and Canada selected
- Top 20% Magic Formula companies
- Minimum daily trading volume of $100,000
- Minimum company market value of $100 million
- Financial statements updated in the last 6 months
- Results sorted by Magic Formula from best to worse
Investment Ideas
| Name | Country | Magic Formula Rank |
|---|---|---|
| The Westaim Corporation | Canada | 5 |
| Lennar Corporation | USA | 69 |
| San Juan Basin Royalty Trust | USA | 114 |
| Spartan Delta Corp. | Canada | 136 |
| Huuuge, Inc. | USA | 143 |
| Zymeworks Inc. | Canada | 167 |
| United States Oil Fund, LP | USA | 189 |
| Transcontinental Realty Investors, Inc. | USA | 222 |
| Gulfport Energy Corporation | USA | 228 |
| SurgePays, Inc. | USA | 232 |
| Perdoceo Education Corporation | USA | 244 |
| Medifast, Inc. | USA | 272 |
| Southwestern Energy Company | USA | 276 |
| RE/MAX Holdings, Inc. | USA | 278 |
| Cheniere Energy, Inc. | USA | 279 |
Magic Formula combined with Price Index 6 month
This is what the screen looked like:
- USA and Canada selected
- Top 10% Magic Formula companies
- Minimum daily trading volume of $100,000
- Minimum company market value of $100 million
- Financial statements updated in the last 6 months
- Results sorted by Price Index 6 months (Momentum) from best to worse
Investment Ideas
| Name | Country | Magic Formula Rank | Price Index 6m |
|---|---|---|---|
| Virco Mfg. Corporation | USA | 1,325 | 3.0 |
| Alpha Metallurgical Resources, Inc. | USA | 463 | 2.4 |
| ADF Group Inc. | Canada | 1,977 | 2.0 |
| Bluegreen Vacations Holding Corporation | USA | 1,518 | 2.0 |
| Hibbett, Inc. | USA | 1,841 | 1.9 |
| Genie Energy Ltd. | USA | 1,482 | 1.9 |
| Semler Scientific, Inc. | USA | 1,218 | 1.8 |
| JAKKS Pacific, Inc. | USA | 1,232 | 1.8 |
| OraSure Technologies, Inc. | USA | 789 | 1.7 |
| Hammond Power Solutions Inc. | Canada | 2,137 | 1.7 |
| Hovnanian Enterprises, Inc. | USA | 1,856 | 1.7 |
| G-III Apparel Group, Ltd. | USA | 1,510 | 1.6 |
| Warrior Met Coal, Inc. | USA | 590 | 1.6 |
| Arch Resources, Inc. | USA | 694 | 1.6 |
| Williams-Sonoma, Inc. | USA | 1,713 | 1.6 |
Click here to start finding your own Magic Formula ideas Now!
Best Magic Formula investment ideas in Europe for 2024
Magic Formula only investment ideas
This is what the screen looked like:
- EU countries, Scandinavia and the UK selected
- Top 20% Magic Formula companies
- Minimum daily trading volume of $100,000
- Minimum company market value of $100 million
- Financial statements updated in the last 6 months
- Results sorted by Magic Formula from best to worse
Investment Ideas
| Name | Country | Magic Formula Rank |
|---|---|---|
| Uniper SE | Germany | 73 |
| Azerion Group N.V. | The Netherlands | 101 |
| PetroNor E&P ASA | Norway | 113 |
| Cliq Digital AG | Germany | 149 |
| Aker BP ASA | Norway | 199 |
| TGS ASA | Norway | 213 |
| Eolus Vind AB (publ) | Sweden | 223 |
| Prevas AB | Sweden | 235 |
| Smiths News plc | Great Britain | 248 |
| MPC Container Ships ASA | Norway | 251 |
| Votum S.A. | Poland | 283 |
| Equinor ASA | Norway | 334 |
| G5 Entertainment AB (publ) | Sweden | 337 |
| BioNTech SE | Germany | 344 |
| Imperial Petroleum Inc. | Greece | 352 |
Magic Formula combined with Price Index 6 month
This is what the screen looked like:
- EU countries, Scandinavia and the UK selected
- Top 10% Magic Formula companies
- Minimum daily trading volume of $100,000
- Minimum company market value of $100 million
- Financial statements updated in the last 6 months
- Results sorted by Price Index 6 months (Momentum) from best to worse
Investment Ideas
| Name | Country | Magic Formula Rank | Price Index 6m |
|---|---|---|---|
| 1&1 AG | Germany | 794 | 2.0 |
| Humble Group AB (publ) | Sweden | 1,436 | 1.9 |
| Euroseas Ltd. | Greece | 707 | 1.8 |
| Höegh Autoliners ASA | Norway | 595 | 1.7 |
| d'Amico International Shipping S.A. | Luxembourg | 821 | 1.6 |
| Yellow Cake plc | Great Britain | 543 | 1.6 |
| Sogefi S.p.A. | Italy | 1,322 | 1.5 |
| Torpol S.A. | Poland | 702 | 1.5 |
| TORM plc | Great Britain | 831 | 1.5 |
| Rana Gruber ASA | Norway | 462 | 1.5 |
| Nordic Paper Holding AB (publ) | Sweden | 558 | 1.5 |
| Hafnia Limited | Norway | 932 | 1.4 |
| Redrow plc | Great Britain | 1,286 | 1.4 |
| AMSC ASA | Norway | 741 | 1.4 |
| Inwido AB (publ) | Sweden | 1,354 | 1.4 |
Click here to start finding your own Magic Formula ideas Now!
Best Magic Formula investment ideas in Asia for 2024
Magic Formula only investment ideas
This is what the screen looked like:
- Australia, Hong Kong, Japan, South Korea, New Zealand and Singapore selected
- Top 20% Magic Formula companies
- Minimum daily trading volume of $100,000
- Minimum company market value of $100 million
- Financial statements updated in the last 6 months
- Results sorted by Magic Formula from best to worse
Investment Ideas
| Name | Country | Magic Formula Rank |
|---|---|---|
| Shinnihonseiyaku Co., Ltd. | Japan | 23 |
| Mitsui Matsushima Holdings Co., Ltd. | Japan | 80 |
| GungHo Online Entertainment, Inc. | Japan | 99 |
| DoubleDown Interactive Co., Ltd. | South Korea | 133 |
| Sankyo Co., Ltd. | Japan | 139 |
| DoubleUGames Co., Ltd. | South Korea | 140 |
| Dongkuk Holdings Co.,Ltd. | South Korea | 141 |
| UNITED, Inc. | Japan | 156 |
| Bank of Innovation,Inc. | Japan | 168 |
| New Hope Corporation Limited | Australia | 187 |
| Mizuho Medy Co.,Ltd. | Japan | 204 |
| Naigai Trans Line Ltd. | Japan | 212 |
| Careerlink Co., Ltd. | Japan | 225 |
| Gamecard-Joyco Holdings,Inc. | Japan | 227 |
| NeoPharm CO., LTD. | South Korea | 233 |
Magic Formula combined with Price Index 6 month
This is what the screen looked like:
- Australia, Hong Kong, Japan, South Korea, New Zealand and Singapore selected
- Top 10% Magic Formula companies
- Minimum daily trading volume of $100,000
- Minimum company market value of $100 million
- Financial statements updated in the last 6 months
- Results sorted by Price Index 6 months (Momentum) from best to worse
Investment Ideas
| Name | Country | Magic Formula Rank | Price Index 6m |
|---|---|---|---|
| Sumiseki Holdings,Inc. | Japan | 285 | 3.1 |
| SK-Electronics CO.,LTD. | Japan | 1,580 | 2.4 |
| Mizuho Medy Co.,Ltd. | Japan | 204 | 1.8 |
| Fukuda Denshi Co., Ltd. | Japan | 1,419 | 1.7 |
| BW LPG Limited | Singapore | 1,676 | 1.7 |
| CTI Engineering Co., Ltd. | Japan | 1,451 | 1.6 |
| Geo Energy Resources Limited | Singapore | 881 | 1.6 |
| Sankyo Co., Ltd. | Japan | 139 | 1.5 |
| Subaru Enterprise Co., Ltd. | Japan | 956 | 1.5 |
| JFE Systems, Inc. | Japan | 696 | 1.5 |
| Vinx Corp. | Japan | 1,488 | 1.5 |
| R&D Computer Co.,Ltd. | Japan | 1,002 | 1.5 |
| KISCO Holdings Corp. | South Korea | 607 | 1.5 |
| ERI Holdings Co., Ltd. | Japan | 962 | 1.5 |
| Tamron Co.,Ltd. | Japan | 1,079 | 1.5 |
How you implement the Magic Formula in your portfolio
Now for the interesting part where you can see how to get your own Magic Formula investment ideas.
We have saved a screen for you
We have already saved a Magic Formula screen for you so all you have to do is load it.
Here is how you do it:
After logging into the screener click the Screener icon then click the Load button as shown below:
Then click on the Predefined filters tab, scroll down, and click on the Magic Formula Screen. To load the screen click the Confirm button.
Select your countries, daily value and company size
All you then have to do is select:
- The Countries
- The minimum Daily trading volume and
- The minimum Market value
of the companies you want to screen for.
The following countries are included in the screener: Countries included in the screener
To choose your countries click the drop down list item below Countries and check all the countries you would like to select.
Next you have to enter the minimum daily trading volume and the minimum market value of the companies you want to screen for. Please note the numbers you enter are in thousands, this means if you enter $125 it is equal to $125,000.
How to combine the Magic Formula with other ratios
With the screener it is very easy to combine the Magic Formula with other ratios or indicators.
The following screen shots will show you exactly how.
To start load the Magic Formula saved screen, select the Countries, Daily Trading Volume and minimum Market Value as shown above.
How to add 6 month Price Index (momentum)
To add Price Index 6m (6 months momentum) to the screen click the drop down list below Secondary Factor and, under the heading Momentum click in the Price Index 6 m menu item.
Then move the slider below Price Index 6m so that you select the top 20% or 30% (set the slider to go from 0% to 20% or 30%) of companies with the best six month Price Index.
(In the screener Magic Formula Rank is called MF Rank)
To get a list of companies click the Apply button.
In the same way you can add:
- 12m Price index (momentum)
- Price to Book
- ERP5
- 5 year average Earnings Yield (EBIT/EV)
You can see all ratios and indicators you can combine with the Magic Formula here: Glossary.
You can save all your screens
Once you have changed the basic Magic Formula screen to fit your investment strategy you can save it so that you can call it up at any time with a few mouse clicks.
You can save as many screens as you like.
To save your screen click the Save As button.
In the pop-up box give your screen a name and a short description so you can remember what the screen does.
To save the screen click on the Confirm button.
That is all you have to do.
When you are done click the Apply button to get your Magic Formula investment ideas.
Frequently Asked Questions
1. What is the Magic Formula, and why should I care?
It's a strategy that helps you find undervalued quality companies with high returns on capital. If you're looking for quality stocks at good prices, this is a great strategy.
2. How can I start using the Magic Formula in my investments?
First, identify companies with high earnings yields and strong returns on invested capital. Then, rank them using these metrics to find the best opportunities.
3. Is the Magic Formula enough on its own, or should I add other factors?
While powerful, combining it with other factors like momentum can significantly increase your returns—by as much as 600% over time.
4. How often should I update my Magic Formula portfolio?
It's best to review your portfolio yearly or every six months, updating your selections based on the latest financial data and rankings.
5. Can I use the Magic Formula globally, or is it better for specific regions?
The strategy works globally, but results may vary by region. Consider tailoring your approach depending on where you want to invest.
6. What are the risks of using the Magic Formula?
Like any strategy, it has its ups and downs. It's essential to be patient, understand that short-term volatility is normal and that the strategy will not always beat the market.
7. Is the Magic Formula suitable for long-term investing?
Yes, it's designed for long-term investing, so it's ideal if you're looking to investment for the long term.
8. How do I know if a stock fits the Magic Formula criteria?
You can use a screener that ranks companies based on earnings yield and return on capital. Look for those in the top 20%.
9. What should I do if a company in my Magic Formula portfolio underperforms?
Evaluate if the fundamentals have changed. If they haven’t, consider holding on, as the strategy requires patience. If you are more risk averse sell your losers and invest in the current best Magic Formula ideas.
10. Can I automate my Magic Formula investing?
Yes, many tools and screeners can automate the selection process, saving you time and ensuring consistency in your strategy.
PS To find the best Magic Formula investment ideas in the countries where you invest (for less than an inexpensive lunch for two) click here: I want to sign up right now!
PPS: It is so easy to put things off. Why not sign up right now, while this is fresh in your mind?
Click here to start finding your own Magic Formula ideas Now!
Please note: This website is not associated with Joel Greenblatt and MagicFormulaInvesting.com in any way. Neither Mr Greenblatt nor MagicFormulaInvesting.com has endorsed this website's investment advice, strategy, or products. Investments recommendations on this website are not chosen by Mr. Greenblatt, nor are they based on Mr Greenblatt's proprietary investment model, and are not chosen by MagicFormulaInvesting.com. Magic Formula® is a registered trademark of MagicFormulaInvesting.com, which has no connection to this website.
