It is time to reveal the first top bargains watch list for 2018 (my first list ever released actually)! The list will be updated weekly. The numbers may seem a bit confusing at first glance, but I have chosen to include the numbers leading to my results, so that it might be easier to follow my calculations.

It is not very complicated, I believe in keeping it simple, and I believe that sticking to simple, easy-to-follow investing principles is the big key to succeed over time in the markets.

How did I come up with these results?

All companies listed here are the stocks that got an above average MATS (Market Adjusted Total Score; explained at the bottom). First I ran the Magic Formula Investing screener to pick the 50 top companies with a minimum market cap of 300 Mill. USD. I excluded companies above 8.000 Mill USD, which brought me a portfolio of 33 companies. For every company I then make a calculation of Earnings Yield (EY) and Return On Invested Capital (ROIC), these numbers are added together (eg. 12 % + 17 % = 29 points). These are defined as performance/efficiency indicators. In addition, I adjust these numbers if Net Working Capital (NWC) exceeds 50 % of the market cap value (eg. if NWC is 60 % of the market cap, 10 points are added. If NWC is 90 % of the market cap, 40 points are added). This leads to the Financial Score in the table below. The stocks are further adjusted for their market price during the last three years, and finally adjusted against their development towards the S&P 500 Index (a company with a 50 % lower stock price than the highest level in last three years, is added 25 points).

The average Market Adjusted Total Score (MATS) for last week was 86,6…

All 33 companies from the screener all together gave an average MATS score of 86,6. The companies that ended up with higher than average score, are the top bargain companies listed in the table below.

You will find an explanation of the numbers in the table at the bottom of the page (how the calculations are made).

Company High last 3 Yrs Current Price Dividend paid Percent of High Added Value (if >50 % discount from High last 3 Years) Financial Score Total Score S&P, Percent of High Market Discount Market Adjusted Total Score
S&P 500 2743 2743 100,0 23 23 100,0 0,0 23,0 05.jan
AMAG 75,8 14,55 19,2 30,8 45,1 91,3 100,0 50,0 116,3 05.jan
AMCX 85,78 52,33 61,0 86,6 86,6 100,0 39,0 106,1 05.jan
AGX 74,5 45,75 61,4 72,1 72,1 100,0 38,6 91,4 05.jan
HRB 37,26 26,79 0,24 72,5 86,5 86,5 100,0 27,5 100,2 05.jan
GME 47,44 18,68 0,38 40,2 9,8 131,5 146,2 100,0 50,0 171,2 05.jan
PDLI 7,57 2,84 37,5 12,5 101,3 120,0 100,0 50,0 145,0 05.jan
PBI 24,29 11,51 0,19 48,2 1,8 100,6 103,3 100,0 50,0 128,3 05.jan
EVC 9,26 7,2 0,05 78,3 129,1 129,1 100,0 21,7 140,0 05.jan
SYNT 52,59 23,67 45,0 5,0 60,9 68,4 100,0 50,0 93,4 05.jan
TVTY 48,05 36,35 75,7 208,7 208,7 100,0 24,3 220,9 05.jan
TRNC 21,77 17,89 82,2 81,6 81,6 100,0 17,8 90,5 05.jan
SRNE 23,72 5,1 21,5 28,5 23,1 65,8 100,0 50,0 90,8 05.jan

 

*MATS: Market Adjusted Total Score. A score which aims to discover stocks with the best combination of financial performance and historical prices.

*Added Value: If >50 % discount from the highest price last 3 years, a factor of 1,5 is added to this difference into the “Total Score” area.
*Market Discount: If the stock has fallen (or risen) more than the market, a factor of 0,5 is used into the “Market Adjusted Total Score” area to adjust for the difference.

*S&P 500, total score: 23 is the average score of the 30 most traded companies in the US Stock Markets.

Disclaimer: The Market Adjusted Total Score (MATS) calculated above, is only a result of my own calculations, and must not be interpreted as “market signals” in any way. I am not an investment advisor. Even though I do my best to avoid mistakes, wrong calculations may occur.