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MagicDiligence (< 20)

August 2009

Recs

1

Magic Formula Weekly Roundup 8/30

August 30, 2009 – Comments (0) | RELATED TICKERS: BKE , MSFT , MYL

Weekly roundup of stocks moving in and out of the Magic Formula Investing screen.

Read the whole article at:

http://www.magicdiligence.com/articles/weekly-roundup-2009-08-30

(this article has lists that do not format into CAPS)

Recs

6

Top Ranked Magic Formula Stocks in Motley Fool CAPS

August 24, 2009 – Comments (1) | RELATED TICKERS: NOV , VIA-B.DL , GIGM

Many MagicDiligence readers are probably familiar with The Motley Fool's CAPS service, and for those of you who are not, I highly recommend checking it out. In essence, CAPS is the world's largest free stock picking game. Every player can rate any stock to outperform or underperform the market, for a variety of time periods from "a few months" to "5 years or more". The rating is then assigned a beginning stock price, and the percentage change in the stock price is tracked vs. the change in S&P 500 (including dividends). Picks outperforming the S&P 500 get a positive score, and underperformers get a negative score. Then all players are assigned a rating based on a number of factors, including total overall score, pick accuracy, and so forth. Like high school, the player score is between 0-100, and the higher the better.  [more]

Recs

1

Magic Formula Weekly Roundup 8/23

August 23, 2009 – Comments (0) | RELATED TICKERS: LLY , MSFT , NOC

Weekly roundup of stocks moving in and out of the Magic Formula Investing screens.

Read the full article at:

http://www.magicdiligence.com/articles/weekly-roundup-2009-08-23

(this article contains lists that do not format into CAPS)

 

Recs

3

Magic Formula Stock Review: Hillenbrand (HI)

August 20, 2009 – Comments (0)

Note: Hillenbrand recently fell off the Magic Formula screen after a long run. It is likely just off the screen and could return any day.  [more]

Recs

1

Magic Formula Weekly Roundup 8/16

August 16, 2009 – Comments (0) | RELATED TICKERS: DNB , GD , PFE

Weekly roundup of stocks moving in and out of the Magic Formula Investing screen.

Read the full article at:

http://www.magicdiligence.com/articles/weekly-roundup-2009-08-16

(this article has lists that do not format into CAPS)

Recs

1

Interactive Data Corp (IDC) is an Attractive Value Stock

August 13, 2009 – Comments (0) | RELATED TICKERS: FDS , IDC.DL2 , TRI

The past 4 or 5 years have been remarkable for the financial services industry as far as how they interact with customers. Just over a decade ago, getting a stock quote often involved calling a broker on the phone or waiting for the newspaper and then wading through the pages of quotes in the business section. Doing company research was even more difficult. Just getting a hold of the SEC filings to look at income statements and balance sheets was a tedious process, requiring a call to the broker, a wait for the materials to arrive in the mail, and then wading through literally hundreds of pages in dozens of documents. Sure, you could always use a research service, but the information still took days to arrive to you and could not be quickly searched, compiled, or compared between companies.

My, how things have changed. Today you can access SEC filings, research service reports, get up to the second stock quotes, compare dozens of stocks against each other, screen literally thousands of stocks by certain criteria, and so forth within minutes using online tools and services. The Internet has made stock investing infinitely easier than it was not that long ago, and there is no shortage of clients taking advantage of it. Financial services firms across the board, from independent sites like the Motley Fool and Morningstar (MORN), to online brokers like E*TRADE (ET) and Zecco, to large deposit and investment banks now allow clients to access financial data, information, and tools. But it would be expensive and inefficient for each of these firms to compile the data themselves. That's where today's Top Buy pick, Interactive Data Corporation (IDC), comes into play.  [more]

Recs

3

The Penalty for Ignoring Goodwill

August 11, 2009 – Comments (0) | RELATED TICKERS: EBAY , KO , RECN

In part I of this mini-series, MagicDiligence defined what goodwill is and how it is accounted for on the balance sheets of public companies. In this second part, we'll take a look at the ramifications of goodwill accounting towards the Magic Formula Investing strategy devised by Joel Greenblatt in The Little Book that Beats the Market.

To do this, let's first quickly review the screening method used by Magic Formula Investing. There are two variables. The first is earnings yield, which is a modified valuation statistic similar to the P/E ratio. It measures how cheap a stock is relative to trailing earnings. The second variable is return on invested capital, which measures the return a company earns on the money it invests into the business. All non-financial and non-utility U.S. traded stocks are scored on these two variables and ranked from highest to lowest on each. The rankings are then added together and, voila!, the MFI screens are created. The idea is that the highest ranked stocks are the best businesses (highest returns on capital) at the cheapest prices (highest earnings yield) available on the market today.  [more]

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Magic Formula Weekly Roundup 8/8

August 08, 2009 – Comments (0)

Weekly roundup of stocks moving in and out of the Magic Formula Investing screen.

Read the whole article at:

http://www.magicdiligence.com/articles/weekly-roundup-2009-08-08

(this article has lists that do not format into CAPS)

 

Recs

2

Matrixx Initiatives (MTXX) - An Investing Parable

August 06, 2009 – Comments (0) | RELATED TICKERS: MTXX.DL

Matrixx Initiatives (MTXX) might as well be renamed Zicam, Inc. The company makes and markets over-the-counter remedies in the following categories: Zicam Cold Remedy (68% of sales), Zicam Allergy Relief (17%), Multi-Symptom Cold and Flu (11%), Cough (4%), and a very small amount from recently launched antacid product Xcid.

This is a cautionary tale, a lesson learned - a parable of investing, if you will. Not long ago Matrixx Initiatives was an attractive looking investment. The Zicam brand had been gaining market share for years in the huge and crowded cold/flu/allergy over-the-counter market, a $4 billion dollar industry. Growth prospects were at least decent, as the launch of Zicam into Canada had been successful, Xcid had been launched, and the company maintained a strong, debt-free balance sheet to take advantage of any opportunities to acquire OTC brands that had to be jettisoned due to FTC requirements of large pharmaceutical company mergers. Revenues were growing at 20% year-over-year rates. Returns on capital were and are outstanding, averaging 26% on a real ROIC basis, and 73% on an MFI basis. It looked like a solid pick for a MagicDiligence Top Buy.  [more]

Recs

5

Goodwill Accounting and Magic Formula Investing, Part 1

August 04, 2009 – Comments (2) | RELATED TICKERS: EBAY

Goodwill is an accounting concept anyone who has investigated financial statements has likely encountered. This 2-part "mini-series" of articles will describe what goodwill is, how it is accounted for, and how it is largely ignored by the Magic Formula screening strategy, sometimes unfortunately for investors. This first article will concentrate on what goodwill is and how it is accounted for.

Goodwill usually shows up in the balance sheet as a long-term asset on its own line item entitled, simply, "Goodwill" (naturally). So the first question is: what does this asset value represent? For the purpose of simple example, lets say that company "Buyer Inc." buys 100% of company "Target Inc." (no, not that Target - TGT!). Let's also say the purchase price was $500 million dollars, all in cash.  [more]

Recs

1

Magic Formula Weekly Roundup 8/2

August 02, 2009 – Comments (0)

Weekly roundup of stocks moving in and out of the Magic Formula Investing screen.

Read the whole article at:

http://www.magicdiligence.com/articles/weekly-roundup-2009-08-02

(this article has lists that do not format into CAPS)

 

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