Being a popular value investing strategy, Magic Formula is a model that can reveal undervalued companies. Originally popularized in Joel Greenblatt's The Little Book That Beats the Market, Magic Formula investing is far different from the other strategies that we use. It is not centered around revenue growth. The model uses 2 variables:
- Earnings Yield
- Return on Invested Capital
On our Magic Formula page, we rank companies by applying both variables with equal weight.
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