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Joel Greenblatt's Magic Formula® Investing (NASDAQ:MFI) strategy is a value stock picking mechanism. It looks for stocks with the best combination of a high earnings yield and a high return on tangible capital, creating a simple algorithm to find "great companies at cheap prices".

What it does not consider is growth, a key ingredient to determining if a stock is truly "cheap", or justifiably carries a low multiple of earnings. Wouldn't it be nice to find great, growing companies at cheap prices? The combination of earnings and multiple growth is what can lead to huge stock price advances. One of the greatest but least talked about "super investors" was Shelby Davis, who generated 23% compound annual returns over a 47 year investing career (turning $50k into $900 million!). He looked for exactly the situation we are talking about here, dubbed the "Davis Double Play".

There are several measures of growth, but probably the purest is revenue growth. You cannot grow a business over the long run without it, and Wall Street funds are attracted to it like moths to the flame. Therefore, in this article, I will show you the 10 MFI stocks with the greatest revenue growth, measured by the most recent quarter's year-over-year comparison. To do this, I used the 3 MFI screens always followed by MagicDiligence: the top 50 stocks over $50 million market cap, the top 50 over $1 billion, and the top 30 over $3 billion. To filter out the oddities, I removed any entries where the growth was generated by a non-recurring revenue windfall. One example is InterDigital's (NASDAQ:IDCC) $375 million sale of patents to Intel (NASDAQ:INTC), booked last quarter, which caused revenue to swell almost 470%!

The List

10) Nu Skin (NYSE:NUS): +22.8%

Multi-level marketing, or MLM, firms, are a staple of MFI due to their good profitability combined with Wall Street's traditional shunning (or outright shorting) of their equity. Nu Skin is no exception. Recent 20%+ growth is on the back of the launch of new ageLOC products and expansion in China. While this level of growth may not be sustainable, I see no reason the firm cannot continue to generate double-digit sales growth for many years.

9) Apple (NASDAQ:AAPL): +27.2%

Wall Street seems certain that Apple has hit its apex, but this certainly isn't apparent from the numbers. Expecting the firm to maintain outrageous market shares in tablets and smartphones was silly, and in any case the company still grabs the vast majority of profits in both areas, as competitors like Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN) make squat in those categories. Recent products continue to sell well - the current 13.7% earnings yield looks like a gift.

8) Seagate (NASDAQ:STX): +32.8%

Both of the major hard drive makers are in this list due to mergers in the past year, in Seagate's case with Samsung's hard drive unit. This has added both volume gains and better pricing, as the hard drive industry has settled into just two large, rational competitors. The volume effect won't continue, but better profitability is probably here to stay.

7) C&J Energy Services (NYSE:CJES): +34.4%

This hydraulic fracturing services operator has delivered great growth ever since its 2011 IPO. Recent results are driven by the June acquisition of Casedhole, offsetting reduced fracking rates as more competition moves in from gas fields. Over the long term, this is a well-run company in a long-tail growth industry with a lot of ramp left. Even after a decent run for the stock recently, it still looks plenty undervalued.

6) Kulicke & Soffa (NASDAQ:KLIC): +49.2%

Kulicke & Soffa is a smaller semiconductor equipment firm that focuses on the step of bonding etched silicon chips to plastic packaging. Specifically, K&S has been doing well as assembly firms are moving from gold bond wires to copper due to the escalating cost of gold. This is a volatile company, with revenues routinely moving 50% quarter-to-quarter, and the stock is similarly unpredictable.

5) Western Digital (NASDAQ:WDC): +49.8%

Western Digital's revenue growth is mainly a product of their March purchase of Hitachi Global Storage - an even bigger deal than Seagate/Samsung. Profitability gains were similar as well. Like Seagate, this kind of revenue growth won't continue, but ongoing margin improvements still make either stock worth a closer look.

4) CVR Energy (NYSE:CVI): +78.2%

With a midwest refinery and pipeline, and interests in nitrogen fertilizer production, CVR has itself a dandy double of businesses enjoying robust operating conditions at present. The Brent/WTI spread and voluminous shale oil production has made midwest refiners very profitable, while historically low natural gas prices has done similar wonders for makers of nitrogen fertilizer. CVR is still investigating a September explosion at its main refinery that killed a worker.

3) Questcor Pharmaceuticals (QCOR): +135%

One of the most phenomenal MFI stories of the past several years, Questcor has taken an obscure, old compound with no patent protection (Acthar) and built an impressively profitable business out of it. Unit volume was up 92% last quarter, as Acthar continues grow demand for nephrotic syndrome and multiple sclerosis indications. The biggest risk in this stock are insurance companies refusing or reducing coverage, as Acthar is a very expensive drug at over $28,000 per vial.

2) Lifevantage (NASDAQ:LFVN): +163%

Lifevantage is yet another Utah-based, supplements-and-skin-care MLM firm in the screens, only this one is in its early stages. Growth here is plainly organic - distributor count has more than doubled over the past year. There is plenty more room to grow, as the company only operates in the U.S., Japan, Mexico, and Australia. However, there is significant concern over a recent health risk-related recall of some of their products.

1) Argan (NYSE:AGX): +214%

The #1 grower is Argan, a small engineering and construction firm who's specialty is natural gas-fired power plants. Recent 200% year-over-year growth is due to the ramp up of construction on a gas power plant in Southern California. With a biomass-fired plant in Texas(worth almost $150 million in sales) ready to start construction, and natural gas a logical alternative to coal for U.S. power generation, Argan looks set to continue doing well into the future.

Source: The 10 Fastest Growing Magic Formula Stocks