Below you can find our list of the 5 best magic formula stocks to buy now. For a detailed discussion as well as a more comprehensive list please see 10 Best Magic Formula Stocks To Buy Now.
5. Facebook, Inc. Common Stock (NASDAQ: FB)
Social media giant Facebook is among the top holdings of Joel Greenblatt as of the end of the third quarter, making up 1.29% of his hedge fund’s portfolio. The total value of the stake is $40.37 million.
Facebook is currently in hot water as it faces a host of lawsuits by federal authorities and states. The Federal Trade Commission sued Facebook on Dec. 9, accusing the company of buying and killing small startups to cull competition. On the same day, a coalition of 46 states, along with the District of Columbia and Guam, sued Facebook over antitrust concerns.
Facebook beat analysts’ estimates for the third quarter but reported a decline in users in the U.S. and Canada. The company warned that it expects further decrease in users in both countries. However, earnings and revenue surpassed analysts’ forecasts.
Wedgewood Partners talked about Facebook in its 2020 Q3 investor letter:
“Facebook’s revenues grew +12% constant currency despite the near total shutdown of economic activity during the month of April. The vast majority of Facebook’s revenues are derived from small businesses, many of which have borne the brunt of lockdowns. To combat the sudden disappearance of foot traffic, these businesses are initiating or accelerating the adoption of digital customer acquisition strategies provided by Facebook’s vast ecosystem, including instant access to over 2 billion daily users. We continue to carry Facebook as one of our largest holdings as its value proposition is difficult to copy, yet the stock trades at still somewhat reasonable multiples relative to large cap peers.”