- Biovail (BVF) develops different formulations for drugs for better effectiveness. It's currently $20.45/share, with an Earnings Yield of 15% and Return on Capital over 100%.
Despite the expected January 2007 launch of a generic version of Wellbutrin, Biovail's top product, the company has forecast earnings for 2007 of $1.75/share, above Wall Street's estimates. They announced plans to eliminate their U.S. salesforce, retire debt, and increase research spending, as well as triple their dividend (to $1.50 a share) and pay a special $0.50 dividend in January. That's definitely intriguing to me, a big fan of dividends. - CCA Industries (CAW) is in the business of health and beauty, with a variety of products (such as Plus+White and Nutra Nail) sold at drug stores and other places. It's currently $11.72/share, with a 14% EY and +100% ROC. The market cap is only $82 million.
- EPIQ Systems (EPIQ) is a software and services company that specializes in legal matters, and stands to benefit from any increase in bankruptcies. $17.02 is the current share price. It has a 16% EY and +100% ROC, with a market cap of $331 million.
Here are 3 Magic Formula picks that might be worth investigating. I probably won't be making any more transactions this year, since I've got 7 Magic Formula positions (FCX, FDG, PALM, PLAY, OVTI, PWEI, EGY). I'm glad I avoided Addudell (looking at the company's history, they seem to completely change their focus to match whatever the hot sector is at the time). I wish I had bought some PNCL (up 29% since 11/6). PLAY was a big winner, with the buyout, and FDG has almost recovered from the big sell-off after the talk of Canada changing its tax treatment of trusts.
Also, Zecco does pay interest on deposited funds, for anyone wondering about that. The yield on the money market fund was 4.35% last month, competitive with my ING account, but not FDIC insured. Zecco is not the place to store your cash, it's a place to buy stocks with zero commissions.
Now, on to the Magic Formula recommendations:
1 comment:
Personally I think Greenblatt’s screen is a fine START. I believe it’s important to do further research. The results this year of the random selections are not that exiting. I believe this will continue in the coming years. This because of the –unexpected- rise in commodity prices over the last years.
By this many commodity companies have high returns on invested capital and high earnings yield, which make them to appear on the Greenblatt-screening, although they lack durable competitive advantages. As a starter for further research, I recommend screening on ROC and EY (like Greenblatt) and I also advice to read his book, The little book that beats the market.
Success in investing,
Hendrik Oude Nijhuis
www.magicformulastocks.com
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