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A Trio of Graham-Style Stock Picks

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- By Alberto Abaterusso

If you want to increase the effectiveness of your search for value opportunities, then you may want to screen the market for stocks whose "Graham blended multiplier" is less than 22.5. Designed by Benjamin Graham, the pioneer of value investing, the multiplier is equal to the stock's price-earnings ratio multiplied by its price-book ratio.

Therefore, investors may want to consider the following stocks, since their Graham blended multipliers are currently less than 22.5.


Baidu Inc

The first stock to consider is Baidu Inc (NASDAQ:BIDU), a Beijing, China-based provider of web search services.

The stock has a Graham blended multiplier of 16.98, as the price-earnings ratio is 9.08 and the price-book ratio is 1.87.

Baidu was trading at $189.97 per share at close on June 3 for a market capitalization of $66.01 billion.

The share price has climbed by 66.06% over the past year for a 52-week range of $108.52 to $354.82.

A Trio of Graham-Style Stock Picks
A Trio of Graham-Style Stock Picks

GuruFocus assigned a rating of 6 out of 10 to the company's financial strength and 8 out of 10 to its profitability.

Currently, the company is not distributing dividends.

On Wall Street, the stock has a median recommendation rating of buy and an average target price of approximately $318.50 per share.

Chubb Ltd

The second stock to consider is Chubb Ltd (NYSE:CB), a Zurich, Switzerland-based insurance company.

The stock has a Graham blended multiplier of 18.60, as the price-earnings ratio is 14.09 and the price-book ratio is 1.32.

Chubb Ltd was trading at $173.40 per share at close on June 3 for a market capitalization of approximately $77.98 billion.

The share price has grown by nearly 23% over the past year, determining a 52-week range of $111.93 to $179.01.

A Trio of Graham-Style Stock Picks
A Trio of Graham-Style Stock Picks

GuruFocus assigned a rating of 4 out of 10 to the company's financial strength and 6 out of 10 to its profitability.

The company is currently paying quarterly dividends to the shareholders, with the next payment, 80 cents per common share (up 2.6% from the prior one), to be made on July 9, generating a forward dividend yield of 1.85% as of Thursday.

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $184.53 per share.

Lennar Corp

The third company to consider is Lennar Corp (NYSE:LEN), a Miami, Florida-based homebuilder.

The stock has a Graham blended multiplier of 15.49, as the price-earnings ratio is 9.74 and the price-book ratio is 1.59.

Lennar Corp was trading at $94.97 per share at close on June 3 for a market capitalization of $29.13 billion.

The share price has grown by approximately 48.5% over the past year for a 52-week range of $57.09 to $110.61.

A Trio of Graham-Style Stock Picks
A Trio of Graham-Style Stock Picks

GuruFocus assigned a rating of 5 out of 10 to the company's financial strength and 8 out of 10 to its profitability.

The company is currently paying quarterly dividends to the shareholders, with the last payment, 25 cents per common share, made on May 5, generating a forward dividend yield of 1.05% as of Thursday.

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $110.23 per share.

Disclosure: I have no positions in any securities mentioned.

This article first appeared on GuruFocus.