For learning about the best magic formula stocks, first, we need to learn what is magic formula stocks. The definition of magic formula stocks is given by Insider Monkey as:
“Greenblatt revealed his famous magic formula investing strategy in his bestselling book titled “The Little Book That Beats The Market,” Greenblatt argued that stocks that have discounted valuations and high returns on capital can produce outperforming results for long-term investors. Greenblatt said in his book that his strategy produced back-tested returns of 30.8% per year from 1988 through 2004, compared to the S&P 500’s 12.4% return during the same period. Gotham had a 24% return from 1998 through 2009.”
This magic formula is only applicable to those firms which have a market cap value of above $100 million. All financial companies are also excluded by this strategy along with other non-US companies and Utility companies. We are sharing the list of best magic formula stocks for 2021 in accordance with the list shared by Insider Monkey.
One of the best magic formula stocks on the list is Johnson & Johnson. Greenblatt sold around 21% of the stock of J&J in Q3. Currently, approximately 158,880 shares have been owned by Gotham in this healthcare firm. The total value of these shares is $23.65 million. J&J company is in the headlines of the news as the firm announced to enroll around 45,000 participants for the 1st late-phase trial of its single-dose Coronavirus vaccine. This is expected that the trial’s interim data will be available in January 2021, which is indicating that the company is lagging behind competitors such as Moderna and Pfizer whose vaccines have won approval already from FDA.
Walmart is another magic formula stock on this list. Around 23% of the stocks of this retail company have been sold by Gotham Asset management during the Q3 of 2020 and currently Gotham company owns shares of $26.34 million in this company. Walmart is considered one of the beneficiaries of the recent changes that took place due to Coronavirus spread. The crushed analysts of the company have estimated growth in sales of 6.4% in Q3. Do you have an interest in more magic formula stock? Then here is a complete list for you: 10 Best Magic Formula Stocks To Buy Now.