Several companies made multiple GuruFocus value screeners as of Aug. 2.
In addition to identifying the best stocks in which to invest, the value screeners provide insight in which sectors have high value potential in the short term. Based on the stocks that made the screeners, retail and industrial companies offer good investing opportunities.
GuruFocus provides several value screeners that allow its users to generate investing ideas from several famous investors. As mentioned in the previous article, these screeners can shed light on which companies offer high value potential. As of Aug. 2, 2016, thousands of company stocks made at least one of the value screeners, as shown in the table below.
| Number of Stocks that Made Various Screeners as of 8/2/2016 | ||||||||
| Screener Name and code | Region | |||||||
| USA | CANADA | UK/IRELAND | EUROPE | ASIA | OCEANIA | LATIN AMERICA | AFRICA | |
| Ben Graham net-net (BGN) | 145 | 56 | 38 | 80 | 441 | 13 | 0 | 0 |
| Undervalued predictable (UVP) | 55 | 10 | 16 | 58 | 45 | 6 | 26 | 5 |
| Buffett-Munger (BFM) | 46 | 5 | 15 | 54 | 54 | 2 | 20 | 5 |
| Greenblatt magic formula (GMF) | 2374 | 487 | 1637 | 5970 | 14226 | 444 | 845 | 275 |
| Historical low p/s (LPS) | 20 | 0 | 5 | 31 | 35 | 2 | 9 | 3 |
| Historical low p/b (LPB) | 20 | 4 | 11 | 49 | 55 | 2 | 11 | 4 |
| Peter Lynch growth (PLG) | 19 | 4 | 19 | 56 | 89 | 4 | 17 | 9 |
| Walter Schloss (WTS) | 55 | 18 | 71 | 99 | 457 | 12 | 10 | 3 |
Currently, over 400 Asian stocks made the Ben Graham Net-Net Screener, suggesting that the Asian market is likely undervalued. Two gurus, Charles de Vaulx and Carl Icahn, invest in stocks that are deeply discounted due to a sharp decline in stock price. As mentioned in a previous article, several Asian companies, especially Chinese banks, are sharply undervalued due to recent economic downturns in the Chinese market. Based on global market valuation data, the Chinese market is significantly undervalued with a total market cap / gross domestic product ratio of 48%.
Due to similar criteria, Ben Graham’s screener and the Walter Schloss Screen likely have several overlaps, i.e., stocks that make Graham’s screener usually also make Walter Schloss’s screener. One industrial company, Trilogiq SA (XPAR:ALTRI, Financial), currently trades near five-year lows. Additionally, the French conglomerate company has historically low valuation ratios: currently, its P/B ratio is near a 10-year low, its P/S ratio is near a five-year low, and its P/E ratio is near a three-year low.
While Trilogiq is not listed on the Historical Low P/S or Historical Low P/B screeners, several retail companies made these screeners. Among the companies listed in the table below, four companies made at least four value screeners.
| Snapshot of a few stocks that made at least three screeners as of 8/2/2016 | ||||||||
| Stock name and symbol | Screener Code | |||||||
| BGN | UVP | BFM | GMF | LPS | LPB | PLG | WTS | |
| Hibbett Sports Inc. (HIBB, Financial) | 1 | 1 | 1 | 1 | 1 | 1 | ||
| Bed Bath & Beyond Inc. (BBBY) | 1 | 1 | 1 | |||||
| Winmark Corp (WINA) | 1 | 1 | 1 | |||||
| Kohl's Corp (KSS, Financial) | 1 | 1 | 1 | 1 | ||||
| Outerwall Inc. (OUTR) | 1 | 1 | 1 | |||||
| Gildan Activewear (TSX:GIL) | 1 | 1 | 1 | |||||
| Next PLC (LSE: NXT) | 1 | 1 | 1 | |||||
| Trilogiq SA (XPAR:ALTRI, Financial) | 1 | 1 | ||||||
| Koh Brothers Group Ltd (SGX:K75) | 1 | 1 | 1 | 1 | ||||
| Transit-Mixed Concrete Ltd. (SGX: 570) | 1 | 1 | 1 | |||||
| McMillan Shakespeare Ltd. (ASX:MMS) | 1 | 1 | 1 | |||||
| Value Group Ltd. (JSE:VLE) | 1 | 1 | 1 | 1 | ||||
All companies that made at least four value screeners are listed on the Greenblatt Magic Formula Screener and the Peter Lynch Growth with Low Valuation Screener. An earlier article discusses Kohl’s Corp. (KSS), one of two U.S. retail companies that made Greenblatt’s screener, the Peter Lynch Growth screener, and both historical low value screeners. Hibbett Sports Inc. (HIBB) made six screeners: in addition to the four screeners mentioned above, the sporting goods company also made the Undervalued Predictable Screener and the Buffett-Munger Screener. As these companies make multiple screeners, Kohl’s and Hibbett Sports offer high value potential to investors.
See also
With these valuation screeners, we can observe where we stand on market valuations. As of Aug.3, the U.S. stock market is significantly overvalued and likely to average just 0.1% in annual returns for the next eight years. However, based on the Shiller price-earnings ratio by sectors, not all sectors are significantly overvalued. Both the consumer cyclical and industrial sectors have a lower Shiller P/E ratio than the overall Shiller P/E ratio for the Standard & Poor’s 500 index. This suggests that consumer cyclical and industrial stocks are good sectors to invest in, despite the overvalued stock market. A previous article further discusses the total market valuation as of July 29.
Disclosure: The author has no position in any of the stocks discussed in this article.
