MagicDiligence's Latest Research Report Highlights 5 Undervalued Stocks Set to Benefit from 5 Huge Global Trends for 2011!
Investors are often categorized into one of three philosophy “bins”: growth, value, or momentum. Growth investors are most interested in the long-term prospects of revenue and profit growth. Value investors are looking to buy stock below a fundamental fair value price target. And momentum investors are thought of as short-term traders looking to make a quick buck off of a good stock chart.
Research has shown that combining these strategies results in the best overall results. James OʼShaughnessyʼs What Works on Wall Street found that low price-to- sales (or book, or earnings) multiples did well, but combined with strong momentum did even better. Subsequent research by stock newsletter reviewer Mark Hulbert found the same thing.
Growth adds another dimension: the potential for an ever-increasing intrinsic value. While buying an undervalued stock gives us valuation upside, buying one with good growth prospects expands the ultimate potential rewards.
Joel Greenblattʼs Magic Formula Investing (NASDAQ:MFI) strategy is designed to find companies that earn high returns on capital selling at cheap prices. However, many of these companies have poor growth prospects that limit the fair value of the stock. Still others face months or years of undervaluation due to poor momentum.
With a little research, we can find companies that meet the value, momentum, *and* growth criteria. It is these stocks that create outsized wealth for their shareholders.
Playing the Trends
Several trends are developing for 2011 that will create significant growth for both their markets and for the companies that participate in them.
The trends range from consumer-driven to government subsidy-driven. Like the automobile in the 1920ʼs or the personal computer in the 1980ʼs, trends always have their winners and losers. My goal in this report is to focus on firms that benefit from these trends in a general way, without having to face crippling competition or uncertain market positions.
While many investors will speculate blindly into trends, it is in fact possible to find stocks that sell well below a reasonable fair value that still stand to benefit from powerful, global shifts towards their business models. It is these firms that provide the best potential for large gains throughout 2011 and beyond.
All 5 stocks in this report are profitable, well-run, and have rock solid balance sheets. All are current or recent Magic Formula screened stocks, and most of them have positive momentum as indicated by outperforming the S&P 500 over the past 3, 6, or 12 month time periods.
To get your copy, click here. These stocks will not stay cheap for long! Act now before Wall Street wakes up!