Channeling Benjamin Graham: 3 Top Picks for Value Hunters in 2024
Benjamin Graham was a famous investor who was active in the 1920s, 1930s and 1940s.. Known as “the father of value investing,” Graham heavily influenced Warren Buffett, whom Graham taught at Columbia University. Those who follow Graham’s philosophy believe in buying value stocks whose intrinsic value is below that of its market value. Specifically, Graham had a theory that investors should own “net-nets” equities. According to The Long Run Plan, net-nets are equities trading below their net current asset value.
In these days of high debt and high valuation, it’s extremely difficult to find stocks that meet Graham’s net-nets criteria. But I did manage to find three names with good prospects that I think he would consider to be value stocks because their total current assets are well above their total current liabilities, while their debt totals are very low.
Richardson Electronics (RELL)
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Richardson Electronics (NASDAQ:RELL) provides power grid and microwave parts and related consumables. The company is positioned to benefit from efforts to bolster America’s power grid as our transportation systems become electrified.
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As of September 2023, RELL’s total current assets were worth $163.3 million, while its total current liabilities came in at just $33.2 million. And, it had no debt.
In Richardson’s quarter that ended in September, its revenue sank 22% year-over-year, due to declines in its sales to semiconductor companies and wind turbine makers. But the company did generate operating income of $1.5 million and it has an impressive backlog of $148.1 million, while it expects its wind turbine business to rebound.
Over the longer term, the firm could be boosted by the expected launch of multiple semiconductor factories in the U.S., making it one of today’s more intriguing value stocks.
Amdocs (DOX)
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Amdocs (NASDAQ:DOX) provides a wide range of software and services to telecom companies. As of the end of Q3, Amdocs’ current assets came in at $1.73 billion, while its total current liabilities amounted to $1.35 billion. The firm had no short-term debt and just $646.7 million of long-term debt.
In a note to investors on Dec. 1, investment bank Jefferies recommended buying DOX stock on any weakness caused by revenue headwinds and geopolitical issues. The bank thinks that these issues will prove temporary.
Further Jefferies noted that Amdocs is the only vendor in their market with decades of experience. They put a price target of $105 on the shares which is an upside of nearly 20%.
T. Rowe Price (TROW)
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T. Rowe Price (NASDAQ:TROW), a huge investment manager, is well-positioned to benefit from the current, ongoing rebound of stocks and bonds.
As of the end of Q3, it had $3.3 billion of total current assets and $1.9 billion of total current liabilities. What’s more, the company only had $69.5 million of short-term debt and $26.,6 million of long-term debt.
Last month, the company’s assets under management surged to $391 million versus $364 million at the end of October. And in Q3, its revenue rose 5.2% YOY to $1.67 billion, while its net income soared 18% YOY to $453 million.
TROW stock has a low forward price-earnings ratio of 15.5.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article.. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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