Earlier this week, we looked at 15 shares that could outperform the Singapore stock market in July 2019 and beyond. The stocks were selected using the Magic Formula investing strategy made famous by investor and author, Joel Greenblatt.
The top five shares shown in that article were:
- Noble Group Limited (SGX: CGP)
- China Sunsine Chemical Holdings Ltd (SGX: CH8)
- Valuetronics Holdings Limited (SGX: BN2)
- Delong Holdings Limited (SGX: BQO)
- Yangzijiang Shipbuilding Holdings Ltd (SGX:BS6)
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 check out 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 28 June 2019 — for each of the 15 companies:
|Company||Share Price (S$)||Earnings yield||ROIC|
|Noble Group Limited||0.081||58.44%||94.28%|
|China Sunsine Chemical Holdings Ltd||1.14||38.64%||48.53%|
|Valuetronics Holdings Limited||0.685||27.50%||94.91%|
|Delong Holdings Limited||5.9||57.40%||29.47%|
|Yangzijiang Shipbuilding Holdings Ltd||1.53||28.13%||28.63%|
|Best World International Limited||1.36||17.33%||662.47%|
|AEM Holdings Ltd||1.03||18.10%||91.37%|
|Meghmani Organics Limited||1.26||19.84%||27.45%|
|Cortina Holdings Limited||1.48||20.26%||26.37%|
|Challenger Technologies Limited||0.53||15.96%||44.10%|
|TPV Technology Limited||0.41||37.38%||16.41%|
|Hour Glass Ltd||0.765||22.85%||20.02%|
|Spindex Industries Ltd||0.9||22.49%||19.41%|
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 15 stocks further to find ideas that suit their individual investing preferences.
Motley Fool Singapore believes the Artificial Intelligence mega-trend is one investors can NOT afford to miss out on. We think it has the potential to be bigger than the Internet, with the AI industry set to be worth US$5.8 trillion per year to the global economy. Click here now to find out more about a collection of AI stocks that are taking the lead and how they could supercharge your investment returns.
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 and HRnetGroup Ltd. Motley Fool Singapore contributor Sudhan P owns shares in HRnetGroup Ltd.