DailyBubble News
DailyBubble News

30 Cheap Large Cap Stocks On Sale Now For May 2024

In May 2024, the Magic Formula screener is still a go-to strategy for many investors, including DailyBubble. Developed by Joel Greenblatt, this strategy focuses on finding the top 30-50 cheapest stocks in the market based on their earnings yield and return on invested capital. The higher the score, the cheaper the stock is considered by this algorithm. This approach provides a way to diversify while still focusing on individual stock picks.

When looking at large-cap stocks with market capitalizations over $18 billion, DailyBubble prefers to buy wide swaths of cheap, high-quality companies for long-term holding. In a market with high multiples, diversification is key to managing risk.

Using data provided by FactSet and Seeking Alpha, DailyBubble compiled a list of the top 10 cheapest stocks based on the Magic Formula screener. Each stock was individually scored to assess its potential for further capital allocation.

DailyBubble also applied Peter Lynch’s EPS to share price chart test to ensure that the earnings growth of the top 10 stocks was trending above price growth. This indicator helps identify overbought or oversold stocks in the growth sector.

Among the top 10 stocks, Altria stood out with a high score despite concerns about the tobacco industry. Other companies like Booking Holdings, Cencora Inc., and Cheniere Energy also showed strong potential based on their Magic Formula scores and earnings growth trends.

However, DailyBubble noted that some stocks like HP Inc. and McKesson Corporation had issues with share price growth outpacing earnings growth, indicating potential concerns about financial engineering and organic growth.

In summary, the Magic Formula remains a favorite strategy for DailyBubble to diversify and self-index. While the approach involves buying the entire list of top stocks, DailyBubble also focuses on individual stock analysis to make informed investment decisions. This method allows for stock picking while still maintaining a balanced and diversified portfolio.

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