Steve Alexander operates a service, Magic Diligence, whose goal is to go beyond the basic Magic Formula Investing screen in order to avoid value traps. If you aren't familiar with the Magic Formula, you should get a copy of Joel Greenblatt's famous book "The Little Book that Beats the Market". When I read it a few years ago, I liked it so much that I gifted it to clients.
While the book was fascinating and helpful (and quite basic), it suffered, in my view, from not taking it to the next step. Perhaps that's more of an art than a science, but there are too many stocks that make the screen (low PE and high return on capital). That's where Steve comes in. He spends his time working to find the best names that meet the criteria (again, avoiding value traps). He recently nailed it with J. Crew Group (JCG).
Magic Diligence has issued a report with 5 picks for 2011. It sells for a stupidly low price of $20. Steve sent it to me to see what I thought, and I am confident that you will find the analysis thoughtful. Each of the stocks is detailed in just two pages - he gets right to the meat, addressing the company background, risks and valuation. Like me, Steve combines fundamentals, technicals and valuation. The 5 stocks address big trends, and they include a Small-Cap, 2 Mid-Caps and 2 Large-Caps.
If you are interested in learning more: Click Here!
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