U.S. markets open in 1 hour 32 minutes

These 3 Graham-Style Stocks Appear Fairly Priced

You can increase the effectiveness of your search for value opportunities if you choose fairly priced or undervalued stocks.

This is what Benjamin Graham, the father of value investing, recommended as a shortcut: multiply the stock's price-earnings ratio by its price-book ratio to build what is known as the "Graham blended multiplier," then choose those stocks whose blended multiplier is less than 22.5.


Thus, the following three stocks may grant value opportunities as their Graham blended multiplier stands below 22.5.

KKR & Co Inc

The first stock that meets the above-listed criteria is KKR & Co Inc (NYSE:KKR).

Shares of the New York-based asset management and investment company traded at a price of $25.30 per unit at close on April 10 for a market capitalization of $21.47 billion.

The stock has a Graham blended multiplier of 15.02, as the price-earnings ratio is 7.15 and the price-book ratio is 2.1. The industry has a median of 8.57 for the price-earnings ratio and a median of 0.76 for the price-book ratio.

The Peter Lynch chart indicates that the stock is fairly priced, as the share price is trading below the earnings line.

The 52-week range is $15.55 to $34.14. KKR & Co grants a dividend yield of 1.98% as of April 10.

Wall Street issued an overweight recommendation rating for this stock and has established an average target price of $32.69 per share.

Alexion Pharmaceuticals Inc

The second stock that meets the above-listed criteria is Alexion Pharmaceuticals Inc (NASDAQ:ALXN).

Shares of the Boston, Massachusetts-based biotech developer of treatments for several blood disorders traded at a price of $96.23 per unit at close on April 10 for a market capitalization of $21.37 billion.

The stock has a Graham blended multiplier of 16.95, as the price-earnings ratio is 8.97 and the price-book ratio is 1.89. The industry has a median of 34.74 for the price-earnings ratio and of 3.04 for the price-book ratio.

The Peter Lynch chart indicates that the stock trades fairly, as its share price is below the earnings line.

The 52-week range is $72.67 to $141.86. Alexion Pharmaceuticals Inc does not pay dividends.

Wall Street issued an overweight recommendation rating for this stock and has established an average target price of $142.40 per share.

Black Stone Minerals LP

The third company that meets the above-listed criteria is Black Stone Minerals LP (NYSE:BSM).

Shares of the Houston, Texas-based explorer of mineral properties and producer of oil and gas in the U.S. traded at a price of $6.50 per unit at close on April 10 for a market capitalization of $1.34 billion.

The stock has a Graham blended multiplier of 8.34, as the price-earnings ratio is 6.84 and the price-book ratio is 1.22. The industry has a median of 7.61 for the price-earnings ratio and of 0.56 for the price-book ratio.

The Peter Lynch chart indicates that the stock is reasonably priced, as its share price is below the earnings line.

The 52-week range is $4.04 to $18.77. Black Stone Minerals LP offers a dividend yield of 21.7% as of April 10.

Wall Street issued an overweight recommendation rating for this stock and has set an average target price of $9.07 per share.

Disclosure: I have no positions in any securities mentioned.

Read more here:



Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

This article first appeared on GuruFocus.