Quick Read

• CVS Health leads this Magic Formula ranking for retirees; Valero’s forward P/E of 9 tempts but crack spread-driven earnings make income unreliable.

• Qualcomm’s 38% automotive revenue growth and 36% return on equity impress, but its 1.6 beta and 18% monthly share decline disqualify it for retirees.

• The Magic Formula screens for cheapness and quality, but retirees must layer in dividend stability and low volatility before selecting core portfolio holdings.

• Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Qualcomm didn’t make the cut. Grab the names FREE today.

Joel Greenblatt’s Magic Formula, popularized in The Little Book That Beats the Market, ranks stocks on two factors: earnings yield (operating earnings divided by enterprise value) and return on capital (how efficiently a business converts invested dollars into profits). For retirement investors, Magic Formula scores are only the starting point. Income reliability, business durability, and volatility matter equally. A bargain-screened name can still be wrong for a retiree if cash flows swing with commodity cycles or if its multiple assumes growth that may not arrive.

Below is a countdown of three candidates, ranked from least to most appropriate for a retirement-focused portfolio.

3. Qualcomm: Quality at a Quality Price

Qualcomm (NASDAQ: QCOM) is the classic Magic Formula quality stock: high gross margins, high returns on equity, and a fortress licensing business. Trailing return on equity is near 36.1%, operating margin around 22.1%, and EV/EBITDA at 14.7. Q2 FY26 delivered non-GAAP EPS of $2.65 on revenue of $10.599 billion, with record Automotive revenue of $1.326 billion, up 38% year over year.

The retirement problem is volatility and yield. Shares fell 16.2% in the past week and 23.9% in the past month, with a beta of 1.596. The dividend yield is just 1.9%, and handset revenue contracted 13% last quarter on memory supply constraints and China exposure. A great business, but not a retiree’s anchor holding.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Qualcomm didn’t make the cut. Grab the names FREE today.

2. Valero Energy: Cash Machine, Cyclical Risk

Valero Energy (NYSE: VLO) is where the Magic Formula screen lights up brightest. A forward P/E of 9, EV/EBITDA of 8.7, and return on equity of 15.9% combine to signal strong earnings yield and respectable capital efficiency. Q1 2026 EPS hit $4.22 against a $3.16 consensus, refining margins expanded to $14.90 per barrel, and management returned $938 million to shareholders while raising the quarterly dividend 6% to $1.20.