Source Post
The “Magic” Formula for Finding Cheap, High-Quality Stocks (Easy Tutorial)
Sep 17, 2025
The creator discusses Joel Greenblatt's "magic formula" for finding stocks, which uses Return on Invested Capital (ROIC) and earnings yield. He proposes modifications to this formula, including adding a minimum market capitalization of $900 million, replacing earnings yield with a forward PE ratio under 20, requiring an ROIC of 15% or higher, and ensuring positive free cash flow. The creator mentions Palantir as an example of a company with a high PE ratio, indicating it's expensive.
Linked Mentions
Tickers discussed in this post
Linked Signals
Tracked calls opened from this post
No linked signals were opened directly from this post.