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MagicDiligence (< 20)

May 2011

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Analyzing the Sustainability of Magic Formula Dividend Stocks

May 26, 2011 – Comments (0) | RELATED TICKERS: USMO , INTC

MagicDiligence has written several times about using the official Magic Formula Investing (MFI) screens as a starting point for locating attractive dividend stocks. There are two main reasons this is true:

1) MFI screens for high earnings yield. This has the effect of finding undervalued stocks where the dividend yield is likely to be higher than normal. Also, since it screens stocks cheap against their trailing earnings, it also creates opportunity for capital gains in the stock price, in addition to dividend payments.  [more]

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Analog Devices - Thriving in a Digital World

May 23, 2011 – Comments (0) | RELATED TICKERS: ADI , TXN , STM

Analog Devices (ADI) is one of the largest suppliers of analog semiconductors. Analog chips are used to convert ambient data, such as temperature, sound, pressure, even light, into digitized data that can be processed and acted upon by electronic systems. Analog Devices' main products are used for these conversions, and also for amplifying certain signals, particularly voice, that are then transmitted and received around the globe.

If you have a cell phone, some applications of this company's products are readily apparent. Analog-to-digital (and vice-versa) voice conversion is a key component of digital cellular communications, as the data is sent over the air in digital format and "re-created" into sound by devices supplied by ADI and its competitors. Smart-phones require even more analog components, such as an accelerometer that is used to orient the screen to however the user is holding the device, for sensing ambient light to determine screen brightness, and for proximity sensors to determine when to turn off the touch screen when the user is holding the phone to his/her ear. The rapid growth of both smart-phones and tablets is an opportunity for ADI, as the firm is one of the top suppliers of accelerometers.  [more]

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Magic Formula Investing Weekly Roundup 5/22/2011

May 22, 2011 – Comments (0) | RELATED TICKERS: ADI , CA , LRCX

Magic Formula Investing (MFI), as described by hedge fund manager Joel Greenblatt in The Little Book that Beats the Market, consists of ranking stocks by earnings yield (cheap) and return on capital (quality), adding the rankings together, and buying from the resulting lists. Below are stocks that have moved into, and dropped out of, 3 of the MFI screens used by MagicDiligence:  [more]

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Par Pharmaceuticals - Buried in the Generic Drugs Battlefield

May 12, 2011 – Comments (1) | RELATED TICKERS: PRX , TEVA , MYL

Generic pharmaceuticals as an industry has very favorable demand dynamics. Several secular trends are converging that will benefit this market. For one, governments and health care insurers around the world and especially in the U.S. are aggressively seeking out ways to reduce skyrocketing health care costs. Since 1960, healthcare spending has expanded from 5% of GDP to over 17% in 2009. Prescription drugs account for about 10% of all healthcare spending, so this is an obvious area to target. Generic versions of branded drugs generally sell for half to one-third of the price. Given this, health care payers have often limited reimbursement to generic versions of certain treatments, raising the demand for them. From 2004 to 2009, generics market share rose from 56% of prescription dollars to nearly 75%.

One of the 2010 healthcare bill's main goals was to increase access to the roughly 15% of Americans with no health insurance. By eliminating insurance denials due to existing conditions, preventing the dropping coverage for sick patients, and offering incentives to small businesses providing coverage, more people will be insured - and more people will be able to purchase prescriptions.  [more]

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Magic Formula Investing Weekly Roundup 5/8/2011

May 08, 2011 – Comments (0) | RELATED TICKERS: LLY , MO , LEA

Magic Formula Investing (MFI), as described by hedge fund manager Joel Greenblatt in The Little Book that Beats the Market, consists of ranking stocks by earnings yield (cheap) and return on capital (quality), adding the rankings together, and buying from the resulting lists. Below are stocks that have moved into, and dropped out of, 3 of the MFI screens used by MagicDiligence:  [more]

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5 Magic Formula Stocks With High Dividend Yield

May 05, 2011 – Comments (0) | RELATED TICKERS: MO , LLY , LMT

An interesting aspect of Joel Greenblatt's Magic Formula Investing (MFI) strategy is that its precepts can be applied to a variety of other stock strategies and focuses, as well. For example, if you like to invest in small caps, MFI can be used to find some good, undervalued businesses in a sector that is under-followed by professional equity analysts. If you are looking to invest in foreign markets, MFI can be applied to stocks in foreign exchanges, and so forth.  [more]

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