Validea's Top Information Technology Stocks Based On Joel Greenblatt

Validea's Earnings Yield Investor model, which applies Joel Greenblatt's "Magic Formula" emphasizing high return on capital and earnings yields, has identified key Information Technology stocks. HP Inc. (HPQ) received a top rating of 100%, indicating strong interest and a "PASS" in the model's final ranking. Conversely, Western Digital Corp (WDC) scored 80% but failed the final ranking, while Leidos Holdings Inc (LDOS) and Cognizant Technology Solutions Corp (CTSH) both received 70% ratings and also failed the final ranking, positioning HPQ as the sole strong recommendation among these IT sector companies by this quantitative value strategy.

Analysis

A quantitative screening of Information Technology stocks using Validea's model based on Joel Greenblatt's value-investing strategy has identified HP Inc. (HPQ) as a standout investment candidate. HPQ achieved a perfect 100% rating, indicating strong interest, and was the only one of the four analyzed firms to receive a 'PASS' on the model's final ranking. This strong signal suggests a favorable combination of earnings yield and return on capital, despite the underlying components being individually rated as 'NEUTRAL'. In stark contrast, Western Digital Corp (WDC) presents a mixed signal, scoring 80%, which typically denotes model interest, but ultimately receiving a 'FAIL' on the final ranking. This implies that while it may possess some attractive characteristics, it does not fully meet the stringent criteria of the 'Magic Formula'. Leidos Holdings Inc (LDOS) and Cognizant Technology Solutions Corp (CTSH) both scored 70%, below the model's threshold for significant interest, and also failed the final ranking, positioning them as less attractive from this specific quantitative perspective.

Key Decisions for Investors

• Given its 100% score and 'PASS' rating from the Greenblatt model, investors employing a value strategy should consider HPQ for further due diligence as a potential long position.
• The conflicting signals for Western Digital, an 80% score but a 'FAIL' on the final screen, suggest investors should exercise caution and investigate the specific fundamental metrics that caused it to be disqualified by the model.
• For Leidos and Cognizant, the sub-80% scores and 'FAIL' ratings indicate they do not currently align with this value strategy, suggesting investors could underweight or avoid these names if adhering to Greenblatt's principles.