20 Best Shares For November 2018 and Beyond: A Behind-The-Scenes Look
Recently, I shared 20 shares that could outperform the Singapore stock market for this month and beyond. The stocks were selected using the Magic Formula investing strategy that was popularised by investor and author, Joel Greenblatt.
The top five stocks shown in that article were:
1) Noble Group Limited (SGX:CGP)
2) Lung Kee (Bermuda) Holdings Limited (SGX: L09) (SEHK: 255)
3) AEM Holdings Ltd (SGX:AWX)
4) Delong Holdings Limited (SGX:BQO)
5) Aspen (Group) Holdings Limited (SGX:1F3)
The strategy behind the Magic Formula is to pick the stocks with the highest quality (the ones with the highest returns on invested capital) at the lowest price (the ones with the highest earnings yield). For an in-depth discussion on what goes into the Magic Formula, you can head to my colleague Chong Ser Jing’s article here.
The following table shows the share price, earnings yield, and return on invested capital (ROIC) — as of 31 October 2018 — for each of the 20 companies:
Source: S&P Global Market Intelligence
Using the above table, investors can (if they wish to) add additional figures such as the free cash flow yield and dividend yield to screen the 20 stocks further to find ideas that suit their individual investing preferences.