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15 Best Shares in October 2018 and Beyond: A Behind-The-Scenes Look

Yesterday, I shared 15 shares that could outperform the Singapore stock market over the next 12 months and beyond. The stocks were selected using the Magic Formula investing strategy that was popularised by investor Joel Greenblatt in his book, The Little Book That Beats The Market.

The top five stocks — according to the Magic Formula — that were mentioned in my earlier article were:

1. Noble Group Limited  (SGX:CGP)

2. Lung Kee (Bermuda) Holdings Limited (SGX:L09) (SEHK:255)

3. Delong Holdings Limited  (SGX:BQO)

4. AEM Holdings Ltd  (SGX:AWX)

5. China Sunsine Chemical Holdings Ltd  (SGX:CH8)

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 the inner workings of the Magic Formula, you can head to my colleague Chong Ser Jing’s article here.

The following table reveals the share price, earnings yield, and return on invested capital (ROIC) — as of 28 September 2018 — for each of the 15 companies:


Source: S&P Global Market Intelligence

With the above table, investors, if they wish to, can add additional numbers such as the free cash flow yield and dividend yield to further screen the 15 stocks to find ideas that suit their individual investing preferences.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of AEM Holdings Ltd. Motley Fool Singapore contributor Sudhan P owns shares in APAC Realty Limited.