Joel Greenblatt magic formula ranks companies based on two factors: return on capital and earnings yield. However, instead of the normal earnings yield calculation which is the inverse of the P/E ratio, Joel Greenblatt utilized a different method for calculating earnings yield.
To keep myself sharp and my skills honed, I routinely go to my library of investment books on stocks and re-read classics that have had an impact on me. This week I did a complete re-read of Joel Greenblatt’s classic “The Little Book That Beats The Market.” For any of you that are not familiar with the book, Joel Greenblatt presents his magic formula for picking stocks that his research indicated will beat the market most of the time.
The article that goes along with this video can be found here:
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FAST Graphs Analyze Out Loud on Allison Transmission Holdings (ALSN), Catalyst Pharmaceuticals (CPRX), EBIX Inc. (EBIX), HP Inc. (HPQ), Supernus Pharmaceuticals Inc. (SUPN)
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