10 Best Best Magic Formula Stocks for November 2025
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Market Overview & Selection Criteria
The 2025 equity landscape is marked by volatility and sector rotation, with investors seeking resilient, fundamentally strong companies. Using ValueSense’s proprietary intrinsic value models and quality ratings, this watchlist highlights stocks with robust cash flows, attractive margins, and sector leadership. Selection criteria include:
- Undervaluation relative to intrinsic value
- Strong or improving free cash flow
- High return on invested capital (ROIC)
- Reasonable debt levels
- Diverse sector representation for risk management
Featured Stock Analysis
Stock #1: Unilever PLC (UL)
| Metric | Value |
|---|---|
| Market Cap | $148.9B |
| Quality Rating | 7.3 |
| Intrinsic Value | $95.9 |
| 1Y Return | 0.4% |
| Revenue | €120.1B |
| Free Cash Flow | €14.5B |
| Revenue Growth | 2.5% |
| FCF margin | 12.1% |
| Gross margin | 71.3% |
| ROIC | 32.1% |
| Total Debt to Equity | 160.7% |
Investment Thesis
Unilever PLC stands out as a global consumer goods leader with a market cap of $148.9B and a ValueSense quality rating of 7.3. The company’s intrinsic value is estimated at $95.9, suggesting potential undervaluation. Unilever’s robust revenue base €120.1B and impressive gross margin 71.3% reflect its pricing power and operational efficiency. With a 1-year return of 0.4%, the stock has lagged the broader market, but its fundamentals remain solid, supported by a free cash flow of €14.5B and a healthy FCF margin of 12.1%. The company’s ROIC of 32.1% underscores effective capital allocation.
Key Catalysts
- Global brand portfolio resilience in consumer staples
- Margin expansion through cost optimization
- Stable free cash flow generation supporting dividends and buybacks
- Defensive positioning in volatile markets
Risk Factors
- Elevated total debt to equity 160.7% may constrain flexibility
- Modest revenue growth 2.5% could limit upside
- Currency fluctuations impacting euro-denominated earnings
Stock #2: Rio Tinto Group (RIO)
| Metric | Value |
|---|---|
| Market Cap | $116.5B |
| Quality Rating | 5.9 |
| Intrinsic Value | $105.2 |
| 1Y Return | 14.5% |
| Revenue | $107.9B |
| Free Cash Flow | $12.7B |
| Revenue Growth | (5.5%) |
| FCF margin | 11.8% |
| Gross margin | 27.7% |
| ROIC | 26.6% |
| Total Debt to Equity | 38.1% |
Investment Thesis
Rio Tinto Group is a mining giant with a $116.5B market cap and a ValueSense quality rating of 5.9. Its intrinsic value is calculated at $105.2, indicating a potential value opportunity. Despite a revenue decline of 5.5% over the past year, Rio Tinto delivered a 1-year return of 14.5%, reflecting strong commodity price cycles. The company’s free cash flow of $12.7B and FCF margin of 11.8% highlight operational efficiency, while a gross margin of 27.7% and ROIC of 26.6% demonstrate solid profitability.
Key Catalysts
- Exposure to global infrastructure and electrification trends
- Cost discipline and capital returns to shareholders
- Diversified commodity portfolio (iron ore, copper, aluminum)
Risk Factors
- Commodity price volatility impacting earnings
- Geopolitical and regulatory risks in mining jurisdictions
- Moderate debt to equity 38.1% but manageable
Stock #3: GSK plc (GSK)
| Metric | Value |
|---|---|
| Market Cap | $95.2B |
| Quality Rating | 6.3 |
| Intrinsic Value | $125.9 |
| 1Y Return | 30.2% |
| Revenue | $297.2B |
| Free Cash Flow | $3,354.0M |
| Revenue Growth | 849.3% |
| FCF margin | 1.1% |
| Gross margin | 37.7% |
| ROIC | 86.2% |
| Total Debt to Equity | 4.8% |
Investment Thesis
GSK plc, with a $95.2B market cap and a ValueSense quality rating of 6.3, is a major pharmaceutical and healthcare player. The stock’s intrinsic value is $125.9, well above current market levels, and its 1-year return of 30.2% signals strong momentum. GSK’s revenue surged to $297.2B (849.3% growth), likely reflecting a significant acquisition or accounting change. Its gross margin of 37.7% and ROIC of 86.2% are exceptional, though the FCF margin is low at 1.1%.
Key Catalysts
- New drug launches and pipeline progress
- Strong return on invested capital 86.2%
- Resilient demand for healthcare products
Risk Factors
- Low free cash flow margin 1.1% may limit reinvestment
- Potential integration risks from rapid revenue growth
- Modest debt to equity 4.8% supports balance sheet strength
Stock #4: Fomento Económico Mexicano, S.A.B. de C.V. (FMX)
| Metric | Value |
|---|---|
| Market Cap | $83.4B |
| Quality Rating | 6.2 |
| Intrinsic Value | $46.4 |
| 1Y Return | -1.6% |
| Revenue | $830.1B |
| Free Cash Flow | $6,865.5M |
| Revenue Growth | 12.6% |
| FCF margin | 0.8% |
| Gross margin | 41.1% |
| ROIC | 23.4% |
| Total Debt to Equity | 17.4% |
Investment Thesis
FMX is a Latin American conglomerate with a $83.4B market cap and a ValueSense quality rating of 6.2. Its intrinsic value is $46.4, and the company reported $830.1B in revenue with 12.6% growth. Despite a slight 1-year return decline -1.6%, FMX’s gross margin of 41.1% and ROIC of 23.4% indicate operational strength. Free cash flow stands at $6,865.5M, though the FCF margin is a modest 0.8%.
Key Catalysts
- Exposure to emerging market consumer growth
- Diversified business segments (beverages, retail, logistics)
- Strong revenue growth and margin profile
Risk Factors
- Currency and macroeconomic risks in Latin America
- Low free cash flow margin 0.8%
- Moderate debt to equity 17.4%
Stock #5: BHP Group Limited (BHP)
| Metric | Value |
|---|---|
| Market Cap | $72.4B |
| Quality Rating | 6.4 |
| Intrinsic Value | $134.7 |
| 1Y Return | 4.9% |
| Revenue | $107.3B |
| Free Cash Flow | $20.7B |
| Revenue Growth | (10.1%) |
| FCF margin | 19.3% |
| Gross margin | 48.7% |
| ROIC | 28.5% |
| Total Debt to Equity | 46.9% |
Investment Thesis
BHP Group Limited, with a $72.4B market cap and a ValueSense quality rating of 6.4, is a diversified mining leader. Its intrinsic value is $134.7, and the company generated $107.3B in revenue, though revenue declined by 10.1% year-over-year. The 1-year return is 4.9%. BHP’s free cash flow of $20.7B and FCF margin of 19.3% are strong, with a gross margin of 48.7% and ROIC of 28.5%.
Key Catalysts
- Global demand for metals (iron ore, copper, nickel)
- High free cash flow supporting dividends
- Operational efficiency and capital discipline
Risk Factors
- Exposure to commodity cycles
- Revenue contraction in the latest period
- Moderate debt to equity 46.9%
Stock #6: Diageo plc (DEO)
| Metric | Value |
|---|---|
| Market Cap | $51.1B |
| Quality Rating | 6.4 |
| Intrinsic Value | $97.8 |
| 1Y Return | -24.7% |
| Revenue | $34.2B |
| Free Cash Flow | $4,427.8M |
| Revenue Growth | 5.1% |
| FCF margin | 12.9% |
| Gross margin | 60.2% |
| ROIC | 30.3% |
| Total Debt to Equity | 184.3% |
Investment Thesis
Diageo plc, a global beverage leader, has a $51.1B market cap and a ValueSense quality rating of 6.4. Its intrinsic value is $97.8. Despite a 1-year return of -24.7%, Diageo maintains a strong gross margin 60.2% and FCF margin 12.9%, with $4,427.8M in free cash flow. Revenue growth is steady at 5.1%, and ROIC is 30.3%.
Key Catalysts
- Premium spirits portfolio with global reach
- Margin expansion through premiumization
- Consistent free cash flow generation
Risk Factors
- High debt to equity 184.3% increases financial risk
- Recent share price underperformance
- Sensitivity to consumer trends and regulation
Stock #7: Ambev S.A. (ABEV)
| Metric | Value |
|---|---|
| Market Cap | $36.2B |
| Quality Rating | 7.6 |
| Intrinsic Value | $2.5 |
| 1Y Return | 11.6% |
| Revenue | R$91.7B |
| Free Cash Flow | R$21.7B |
| Revenue Growth | 13.4% |
| FCF margin | 23.6% |
| Gross margin | 51.5% |
| ROIC | 22.6% |
| Total Debt to Equity | 3.4% |
Investment Thesis
Ambev S.A. is a leading beverage company in Latin America, with a $36.2B market cap and a ValueSense quality rating of 7.6. Its intrinsic value is $2.5, and the company reported R$91.7B in revenue with 13.4% growth. The 1-year return is 11.6%. Ambev’s free cash flow is R$21.7B, with a robust FCF margin of 23.6%, gross margin of 51.5%, and ROIC of 22.6%.
Key Catalysts
- Strong market share in Latin America
- High free cash flow and profitability
- Growth in premium beverage segments
Risk Factors
- Currency volatility in Brazil and Latin America
- Low debt to equity 3.4% supports financial stability
- Competitive beverage landscape
Stock #8: Gold Fields Limited (GFI)
| Metric | Value |
|---|---|
| Market Cap | $34.4B |
| Quality Rating | 8.0 |
| Intrinsic Value | $34.4 |
| 1Y Return | 133.1% |
| Revenue | $10.9B |
| Free Cash Flow | $2,046.4M |
| Revenue Growth | 24.6% |
| FCF margin | 18.7% |
| Gross margin | 43.1% |
| ROIC | 42.7% |
| Total Debt to Equity | 40.9% |
Investment Thesis
Gold Fields Limited, with a $34.4B market cap and a ValueSense quality rating of 8.0, is a top gold producer. Its intrinsic value matches its market cap at $34.4. The company posted a remarkable 1-year return of 133.1%, with revenue of $10.9B and 24.6% growth. Free cash flow is $2,046.4M, FCF margin is 18.7%, and gross margin is 43.1%. ROIC is a strong 42.7%.
Key Catalysts
- Gold price appreciation and safe-haven demand
- High profitability and capital efficiency
- Expansion of mining operations
Risk Factors
- Sensitivity to gold price fluctuations
- Operational risks in mining
- Moderate debt to equity 40.9%
Stock #9: Humana Inc. (HUM)
| Metric | Value |
|---|---|
| Market Cap | $33.5B |
| Quality Rating | 5.9 |
| Intrinsic Value | $749.6 |
| 1Y Return | 8.3% |
| Revenue | $123.1B |
| Free Cash Flow | $2,439.0M |
| Revenue Growth | 9.9% |
| FCF margin | 2.0% |
| Gross margin | 100.0% |
| ROIC | 142.0% |
| Total Debt to Equity | 68.8% |
Investment Thesis
Humana Inc. is a major healthcare insurer with a $33.5B market cap and a ValueSense quality rating of 5.9. Its intrinsic value is $749.6, and the company reported $123.1B in revenue with 9.9% growth. The 1-year return is 8.3%. Humana’s free cash flow is $2,439.0M, FCF margin is 2.0%, and gross margin is 100.0%. ROIC is an impressive 142.0%.
Key Catalysts
- Growth in Medicare Advantage and healthcare services
- High gross margin and capital efficiency
- Aging population driving demand
Risk Factors
- Low free cash flow margin 2.0%
- Regulatory and reimbursement risks
- Moderate debt to equity 68.8%
Stock #10: PulteGroup, Inc. (PHM)
| Metric | Value |
|---|---|
| Market Cap | $23.6B |
| Quality Rating | 6.1 |
| Intrinsic Value | $106.7 |
| 1Y Return | -7.3% |
| Revenue | $17.6B |
| Free Cash Flow | $544.1M |
| Revenue Growth | 1.8% |
| FCF margin | 3.1% |
| Gross margin | 27.5% |
| ROIC | 22.3% |
| Total Debt to Equity | 15.8% |
Investment Thesis
PulteGroup, Inc. is a leading U.S. homebuilder with a $23.6B market cap and a ValueSense quality rating of 6.1. Its intrinsic value is $106.7, and the company reported $17.6B in revenue with 1.8% growth. The 1-year return is -7.3%. Free cash flow is $544.1M, FCF margin is 3.1%, gross margin is 27.5%, and ROIC is 22.3%.
Key Catalysts
- U.S. housing demand and demographic tailwinds
- Operational efficiency and capital returns
- Low debt to equity 15.8% supports financial health
Risk Factors
- Sensitivity to interest rates and housing cycles
- Modest revenue and FCF growth
- Competitive homebuilding market
Portfolio Diversification Insights
This watchlist spans consumer staples, mining, healthcare, beverages, gold, insurance, and homebuilding, offering sectoral diversification to mitigate risk. Exposure to both defensive (Unilever, GSK, Diageo) and cyclical (Rio Tinto, BHP, PulteGroup) sectors balances growth and stability. Emerging market exposure (FMX, Ambev) and gold (Gold Fields) provide further diversification against macroeconomic shocks.
Market Timing & Entry Strategies
Entry timing should consider sector rotation, macroeconomic cycles, and individual stock catalysts. For cyclical stocks (mining, homebuilding), monitor commodity prices and interest rate trends. Defensive names may offer resilience during downturns. Use ValueSense’s intrinsic value tools to identify entry points when stocks trade below fair value, and consider dollar-cost averaging for volatile sectors.
Explore More Investment Opportunities
For investors seeking undervalued companies with high fundamental quality, our analytics team provides curated stock lists:
📌 50 Undervalued Stocks (Best overall value plays for 2025)
📌 50 Undervalued Dividend Stocks (For income-focused investors)
📌 50 Undervalued Growth Stocks (High-growth potential with strong fundamentals)
🔍 Check out these stocks on the Value Sense platform for free!
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FAQ Section
Q1: How were these stocks selected?
Stocks were chosen using ValueSense’s intrinsic value models, quality ratings, and a focus on strong cash flow, profitability, and sector diversification, ensuring a balanced and data-driven watchlist.
Q2: What's the best stock from this list?
There is no single “best” stock; each offers unique strengths. For example, Gold Fields (GFI) delivered the highest 1-year return, while Unilever (UL) and Ambev (ABEV) stand out for quality and stability. Investors should align choices with their risk tolerance and goals.
Q3: Should I buy all these stocks or diversify?
Diversification is key to managing risk. This watchlist is designed to provide exposure across sectors and geographies, reducing reliance on any single company or industry.
Q4: What are the biggest risks with these picks?
Risks include sector-specific volatility (commodities, homebuilding), currency fluctuations (emerging markets), high debt (Diageo, Unilever), and regulatory or operational challenges in healthcare and mining.
Q5: When is the best time to invest in these stocks?
Optimal timing depends on individual stock valuations, sector cycles, and market conditions. ValueSense’s intrinsic value tools can help identify attractive entry points, but investors should consider long-term horizons and avoid market timing.
This article is for educational purposes only and does not constitute investment advice. For more in-depth analysis and tools, visit ValueSense.