Recently, we looked at 15 shares that could outperform the Singapore stock market in June 2019 and beyond. The stocks were selected using the Magic Formula investing strategy that was popularised by investor and author, Joel Greenblatt.
The top five shares shown in that article were:
- Noble Group Limited (SGX: CGP)
- Valuetronics Holdings Limited (SGX: BN2)
- China Sunsine Chemical Holdings Ltd (SGX: CH8)
- Delong Holdings Limited (SGX: BQO)
- AEM Holdings Ltd (SGX: AWX)
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 31 May 2019 — for each of the 15 companies:
|Company||Share Price (S$)||Earnings yield||ROIC|
|Noble Group Limited||0.081||58.44%||94.28%|
|Valuetronics Holdings Limited||0.605||36.88%||94.91%|
|China Sunsine Chemical Holdings Ltd||1.15||38.07%||48.53%|
|Delong Holdings Limited||5.92||57.20%||29.47%|
|AEM Holdings Ltd||0.845||23.18%||91.37%|
|Yangzijiang Shipbuilding Holdings Ltd||1.37||36.27%||28.63%|
|Best World International Limited||1.36||17.33%||662.47%|
|Cortina Holdings Limited||1.19||26.84%||26.37%|
|TPV Technology Limited||0.33||46.33%||16.41%|
|Meghmani Organics Limited||0.68||19.01%||27.45%|
|Challenger Technologies Limited||0.555||15.00%||44.10%|
|Hour Glass Ltd||0.755||23.27%||20.02%|
|ComfortDelGro Corporation Ltd||2.46||14.79%||26.74%|
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.
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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 and HRnetGroup Ltd. Motley Fool Singapore contributor Sudhan P owns shares in HRnetGroup Ltd.
Motley Fool Singapore 2019