This is a quick follow-up of SGX’s article, “Valuations of Singapore’s Most Traded High ROE Stocks“.

These 16 stocks’ ROE ranged between 10% to 26% and their Price-to-book (PB) ratios are lower than their 5-year averages. They are also highly traded in the market.

I understand why SGX Research did this screen. Firstly, high ROE stocks usually indicate quality of a business and the have higher-than average ability to generate earnings for the shareholders.

Secondly, a quality stock can sell at high prices and filtering those that are trading below their average PB ratios is an indication of cheapness.

Thirdly, high trading volume is a proof of the stocks’ popularity.

Hence, it sounds like a variation of Joel Greenblatt’s Magic Formula, whereby the screen seeks to find quality businesses trading at cheap prices.

I wanted to expand the data to 10 years of PB range rather than just