Validea's Top Consumer Discretionary Stocks Based On Joel Greenblatt

According to Validea's Earnings Yield Investor model, which is based on Joel Greenblatt's investment strategy, TopBuild Corp (BLD) receives a rating of 90%, indicating strong interest based on the firm's fundamentals and valuation. The model favors companies with high return on capital and earnings yields; TopBuild, a mid-cap company in the Construction Services industry, meets the criteria.

Analysis

TopBuild Corp (BLD), a mid-cap growth stock in the Construction Services industry, has received a 90% rating from Validea's Earnings Yield Investor model, which is based on Joel Greenblatt's published investment strategy. This high rating indicates strong interest in the stock, as scores above 90% are typically viewed as such by this model, which prioritizes companies with high return on capital and earnings yields. TopBuild operates as an installer and specialty distributor of insulation and related building material products in the United States and Canada, with segments covering Installation (primarily for residential new construction, commercial/industrial, and repair/remodel markets) and Specialty Distribution. While the detailed criteria table shows 'NEUTRAL' for both Earnings Yield and Return on Tangible Capital for BLD, the stock achieved a 'PASS' on its 'FINAL RANKING' within the model, suggesting that the overall assessment remains positive when all factors are considered, as not all criteria receive equal weighting or are independent. Greenblatt's strategy, famously outlined as the "Magic Formula," demonstrated significant historical outperformance with back-tested returns of 30.8% per year from 1988 to 2004. This context, coupled with a strongly positive sentiment score of 0.65 for the article and a high per-ticker sentiment of 0.85 for BLD, underscores the potential appeal of the stock according to this specific quantitative screen.

Key Decisions for Investors

• Investors may consider TopBuild Corp for further investigation, given its high rating from a historically successful quantitative model and the associated 'strong interest' signal.
• A deeper dive into why Earnings Yield and Return on Tangible Capital are rated 'NEUTRAL' is warranted to understand the nuances, despite the overall 'PASS' and 90% score from the Greenblatt model.
• Factor in the company's operations within the construction services and building materials distribution sectors, which are influenced by trends in residential and commercial construction, as well as repair and remodel markets.