EA - 11 High-Quality Blue Chips Potentially Poised To Pop

2024-03-21 07:00:00 ET

Summary

• Joel Greenblatt's Magic formula is rules-based and focused on ROC - return on capital.
• The critical elements of Greenblatt's formula are quality, value, diversification, and annual rebalancing.
• The Zen Quality Portfolio utilizes these elements, combining ETFs and individual stocks, including those with very high ROC/PEG.
• This metric combines quality, value and growth, and these 11 blue chips have profitability that's considered better than the S&P.
• Combined with IWY ( the king of quality ETFs) they create an Ultra Sleep Well At Night quality portfolio that historically delivers strong returns and income growth.

Last week, I showed you a rules-based approach using Joel Greenblatt's Magic formula as an example.

The critical elements of Greenblatt's magic formula are:

1. Quality (return on capital).
2. Value (EV/EBITDA or PE ratio).
3. Diversification (30 stocks).
4. Annual rebalancing - historically, 0.7% rebalancing premium, according to Vanguard.

Let me show you how we're using these elements for our Zen Quality Portfolio during this year's rebalancing.

The Zen portfolio strategy uses 50% ETFs that target your goal (yield, growth, value, quality, low volatility, etc.). The other 50% go into the best individual stocks matching those goals....

For further details see: