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Value Screeners Identify Cheap Company Stocks

- By James Li

As discussed in a previous article, the value screeners offer helpful investing insights. Not only do the screeners list good company stocks in which to invest, they can also identify which stock markets are undervalued.

As of Aug. 29 more than 2,800 global stocks made at least one of the value screeners, as shown in the table below.

Screener name

USA

Canada

UK / Ireland

Europe

Asia

Oceania

Latin America

Africa

Ben Graham net-net (BGN)

184

73

47

245

607

21

4

6

Undervalued predictable (UVP)

56

10

17

78

46

6

19

5

Buffett-Munger (BFM)

43

4

12

60

64

3

18

4

Historical low p/s (LPS)

23

0

9

36

41

3

11

2

Historical low p/b (LPB)

24

2

10

48

61

4

10

3

Peter Lynch growth (PLG)

22

3

23

73

90

4

19

7

Walter Schloss (WTS)

18

19

64

89

471

15

11

3

Total

370

111

182

629

1380

56

92

30

Across all eight regions, the number of stocks that made the value screeners increased during August. Some screeners had high increases: for example, the Ben Graham Net-Net Screener added nearly 200 Asian companies since Aug. 3. This suggests that Asian stock markets are moderately undervalued and present good investing opportunities.

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As of Aug. 29, several Asian stock markets have high projected annual rates of return. Among the developed countries, Singapore has the highest projected annual return at 17.9%. With a total market valuation / gross national product ratio of just 20, the Russian stock market is severely undervalued.

U.S. companies trade at cheap prices, too

Even though the U.S. stock market is significantly overvalued, some sectors still trade at deeply low prices relative to their net-net working capital, one of Ben Graham's criteria for stock investing. As implied by the table below, technology and health care companies offer the best opportunities based on price.

Sector name

# of U.S. stocks on BGN screener list

Basic materials (101)

6

Consumer cyclical (102)

12

Financial services (103)

8

Real estate (104)

2

Consumer defensive (205)

3

Health care (206)

88

Utilities (207)

0

Communication services (308)

0

Energy (309)

5

Industrials (310)

13

Technology (311)

47

As of Aug. 29, two biotechnology companies and one communication equipment company made both the Ben Graham Net-Net screener and the Walter Schloss screener. These two value screeners share common characteristics, as discussed in an earlier article. Such companies have no meaningful debt and trade near deeply low prices.

Despite having poor Piotroski F-scores and Beneish M-scores, Adverum Biotechnologies Inc. (ADVM) has the highest possible financial strength rank of 10. The biotech company has little or no debt: Advernum's equity-to-asset ratio outperforms 91% of global biotech companies. Additionally, the company's equity-to-asset ratio seldom dropped below 0.9 during the past two years, and the company's interest coverage ratio is "10000," the numeric code for "no debt."

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Like Adverum, Mirna Therapeutics Inc. (MIRN) also has little or no debt. With an Altman Z-score of 8.78, the oncology therapeutics company has almost no distress. Additionally, Mirna's stock price is currently trading near 52-week lows.

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Technical Communications Corp. (TCCO) currently has a financial strength rank of 9, suggesting a strong financial outlook. The company has a strong Altman Z-score, currently has no debt and has a higher equity-to-asset ratio than 97% of global communication equipment companies. Additionally, the technology company currently trades near 10-year lows.

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Conclusions and see also

GuruFocus provides its premium members with an eclectic variety of value screeners, including the all-powerful All-in-One Guru Screener. This screener allows you to find good company stocks using over 150 different filters. Additionally, the All-in-One screener has a Backtesting feature that allows you to track the screener's performance over a three-year time period. Premium plus members can backtest for up to 10 years.

Disclosure: The author has no position in any of the stocks mentioned in this article.

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This article first appeared on GuruFocus.