3 Large-Cap Stocks Trading Below the Graham Number
- By Alberto Abaterusso
One way to discover value opportunities is to screen the market for stocks that are trading below the Graham Number, as such stocks could be selling at discount to their intrinsic value.
The Graham Number is calculated as the square root of "earnings per share x book value per share x 22.5."
UBS Group
The first stock to consider is UBS Group AG (NYSE:UBS), a Swiss diversified bank.
The stock traded at a price of $15.4 per share at close on Friday, which is below the Graham Number of $22.41 as of the September quarter, for a price-to-Graham-Number ratio of nearly 0.69.
The share price has risen over the past year by 17.20% for a market capitalization of $54.67 billion and a 52-week range of $7.48 to $15.61.
GuruFocus has assigned a score of 3 out of 10 for the company's financial strength and 5 out of 10 for its profitability.
On Wall Street, the stock has a median recommendation rating of overweight with an average price target of $16.93 per share.
The company's top fund holder is Massachusetts Financial Services Co/ma/ with 3.89% of shares outstanding, followed by UBS Group AG with 3.50% and Credit Suisse AG with 3.35%.
Honda Motor
The second stock to consider is Honda Motor Co. Ltd. (NYSE:HMC), a Japanese automaker.
The stock traded at a price of $29.16 per share at close on Friday, which is below the Graham Number of $46.66 as of Dec. 31, for a price-to-Graham-Number ratio of approximately 0.62.
The stock has risen 7.8% over the past year for a market capitalization of $50.35 billion and a 52-week range of $19.38 to $30.21.
GuruFocus has assigned a score of 5 out of 10 for the company's financial strength and 6 out of 10 for its profitability.
On Wall Street, the stock has a median recommendation rating of buy with an average price target of $36.22 per share.
Ken Fisher (Trades, Portfolio), American Century Companies Inc. and Jim Simons (Trades, Portfolio)' Renaissance Technologies are among the largest fund holders, owning 0.39%, 0.35% and 0.23% of the company's shares outstanding.
POSCO
The third company to consider is POSCO (NYSE:PKX), a South Korean producer of steel rolled products and plates.
The stock was trading at a price of $61.99 per share at close on Friday, which is below the Graham Number of $78.38 as of the September quarter, for a price-to-Graham-Number ratio of 0.79.
As a result of a 36.57% increase in its share price, the stock has a market capitalization of around $19.75 billion and a 52-week range of $26.27 to $67.39.
GuruFocus has assigned a score of 5 out of 10 for the company's financial strength and 6 out of 10 for its profitability.
On Wall Street, the stock has a median recommendation rating of buy with an average price target of $74.97 per share.
Richard Pzena (Trades, Portfolio) and Northern Trust Corp are among the largest company's top fund holders, owning 0.32% and 0.27% of shares outstanding.
Disclosure: I have no positions in any security mentioned in this article.
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This article first appeared on GuruFocus.
