This Screener is inspired by the ideas of fundamental stock screening described in "The Little Book that Beats the Market" by Joel Greenblatt.
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In the book "The Little Book that Beats the Market", Joel Greenblatt came up with a simple way to screen and invest in stocks. By following the clearly outlined simple steps and magic formula, you can achieve extraordinary long-term investment results with a very low level of risk.
General Screening instructions:
- Set a minimum market capitalization (usually greater than $50 million)
- Set the minimum Return on Assets (ROA) at 25%
- From the resulting group of high ROA stocks, screen for stocks with the lowest PE ratios (or the highest Earnings Yield = 1 / PE)
- Eliminate all utilities and financial stocks from the list
- Eliminate all foreign companies from the list
- If a stock has a very low PE ratio, say 5 or less, that may indicate that the previous year or the data being used are unusual in some way. You may want to eliminate these stocks.
- You may also want to eliminate any company that has announced earnings in the last week (minimize incorrect or untimely data)
- Invest in 20–30 highest ranked companies, accumulating 2–3 positions per month over a 12-month period
- Re-balance portfolio once per year, selling losers one week before the year-mark and winners one week after the year mark
- Continue over a long-term (3–5+ year) period
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