When fund manager Joel Greenblatt published his investing guide, The Little Book That Beats the Market, in 2005, it marked a unique point for investors. They now had in their hands insights into strategies that a value investing master himself used that are easily replicated. As proof, Greenblatt has achieved phenomenal results over the past two decades, beating even the performance of Warren Buffett.

The strategy is deceptively simple: Buy undervalued, high-performing companies and hold for a year. Wash, rinse, and repeat. But what if we can augment Greenblatt's methodology? Below, we've used a "magic formula"-like screen that approximates the criteria for pre-tax earnings and return on capital that he lays out, but adds to it companies with top ratings of four or five stars from Motley Fool CAPS. Combining those rankings with the criteria that Greenblatt suggests should give us winning investments that may just produce some outsized returns.

Here are a few companies that showed up when I ran this screen recently.

Stock

Pre-Tax Earnings Yield %

Pre-Tax Return on Capital %

Recent Stock Price

CAPS Rating

Accenture (NYSE:ACN)

20%

>100%

$29.19

*****

American Reprographics (NYSE:ARP)

24%

>100%

$3.90

****

Forest Laboratories (NYSE:FRX)

22%

>100%

$21.44

****

SeaBright Insurance

22%

>100%

$9.72

****

Telemig Celular Participacoes (NYSE:TMB)

35%

>100%

$38.71

*****

Source: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS. Pre-tax earnings yield is the inverse of enterprise value/EBIT. Pre-tax ROC is EBIT divided by tangible capital employed.

Although Greenblatt's strategy is a mechanical one, we don't think you should just rely on this as a list of companies to buy. Due diligence is always a smart requirement. So, let's see what CAPS members have to say about a couple of these.

A little bit of pixie dust
Scandal can lead to near-collapse for the company engaged in underhanded tactics, as Satyam Information Services (NYSE:SAY) has discovered after reporting fraudulent bookkeeping. Yet it can hurt others in the business as well, and the Indian outsourcing industry is learning that lesson firsthand.

It also happens to open up opportunities for competitors. With its "near sourcing," or the practice of looking closer to home -- but not in typically high-cost labor markets -- for personnel, Accenture may benefit from the backlash, along with IBM (NYSE:IBM) and others.

It's more than scandal that's causing companies to cut back. As the unprecedented financial crises around the world play out, companies' customers just disappear.

Accenture, for example, generated 20% of its revenues and operating profits from the financial services sector in the first quarter of 2009, down from 22% and 24%, respectively, the year before. When institutions file for bankruptcy protection or fold into another company, it's going to affect operations. Infosys (NASDAQ:INFY) has had to cut back growth projections because clients are reducing their spending.

As difficult as things have been, Accenture, a U.S.-based outsourcing and management consultant company, was able to report that financial services revenue was flat for the quarter, but up 2% when counted in the currency where it was earned. In fact, all five of its operating groups reported that revenues grew in local currencies. That kind of performance has impressed CAPS member tchaudry1.

Accenture is well positioned and has some of the smartest financial guru's at its helm. Accenture has outperformed even in the most turbulent of times.

Beat the Street
Though he has provided an interesting magic formula, you'll need to read more than a few pages of Greenblatt's book to make your buy or sell decisions. Start your own research on these stocks on Motley Fool CAPS, where your opinion counts. You can read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page.

American Reprographics is a Motley Fool Hidden Gems selection. American Reprographics and Accenture are Inside Value recommendations. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.