You Can't Do the Math Manually
The Magic Formula ranks thousands of publicly traded companies based on their Return on Capital and Earnings Yield. Doing this manually by reading annual reports is practically impossible. You need a reliable stock screener.
There are several great tools available, ranging from Greenblatt's own free website to advanced global platforms. Here are the best options.
1. The Official Magic Formula Website (Free)
Joel Greenblatt set up magicformulainvesting.com to accompany his book. It remains the most popular starting point.
- Pros: 100% free to use. It uses the exact methodology from the book, automatically filtering out utilities and financials.
- Cons: It only screens US stocks. You cannot export the data to Excel, and it acts as a "black box" — you see the ranking, but not the underlying data points like the exact ROC percentage.
2. Quant Investing (Paid)
If you are a serious investor looking to apply the strategy outside the US, Quant Investing is widely considered one of the best premium screeners.
- Pros: Global database (Europe, Asia, US). It explicitly features a built-in Magic Formula filter. You can combine the formula with other metrics (like Momentum or Piotroski F-Score) to refine your list.
- Cons: Requires a monthly or annual subscription, which might eat into the returns of investors with smaller portfolios.
3. Uncle Stock (Paid)
Uncle Stock is another favourite among quantitative value investors.
- Pros: Deep historical data and massive global coverage. It allows you to backtest the Magic Formula against specific markets (e.g., checking how it performed in Germany over the last 5 years).
- Cons: The interface is highly analytical and can be overwhelming for beginners.
4. Finviz / Stock Rover (Freemium)
General-purpose screeners can be used, but require more manual work.
- Pros: Finviz is incredibly fast and visual. Stock Rover offers exceptional depth of data.
- Cons: They do not have a standard "Magic Formula" button. You have to manually set filters for high ROIC and low EV/EBIT — an approximation of the formula rather than the exact methodology.
Feature Comparison
| Screener | Price | Region | Customisation | Best For |
|---|---|---|---|---|
| Official MF Site | Free | US Only | None (Black Box) | Beginners & US-focused investors |
| Quant Investing | Paid | Global | Very High | Serious global & European investors |
| Uncle Stock | Paid | Global | Very High | Data nerds who want to backtest |
| Finviz | Freemium | US Focus | Medium (Approximation) | Visual screeners |
Which One Should You Choose?
If you are just starting out and want to invest purely in the US market, the official free website is all you need. If you want to invest in European or Asian markets, or combine the Magic Formula with other quantitative filters, upgrading to a tool like Quant Investing is highly recommended.
For a closer look at applying the formula across the Atlantic, read Magic Formula Investing in Europe. And once you've chosen your screener, our step-by-step portfolio guide will walk you through the buying and rebalancing process.
