1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Benjamin Clark
Benjamin Clark
Articles (242)  | Author's Website |

5 Best Stocks for Value Investors This Week

These companies are the best undervalued stocks of the week

March 19, 2017 | About:

I evaluated 29 different companies this week to determine whether they are suitable for Defensive Investors -- those unwilling to do substantial research -- or Enterprising Investors -- those who are willing to do such research. I also put each company through the ModernGraham valuation model based on Benjamin Graham's value investing formulas in order to determine an intrinsic value for each.

Out of those 29 companies, only five were found to be undervalued or fairly valued and suitable for Defensive and/or Enterprising Investors. Therefore, these companies are the best undervalued stocks of the week.

The elite

The following companies were found to be suitable for either the Defensive Investor or Enterprising Investor and undervalued:

LaSalle Hotel Properties (NYSE:LHO)

LaSalle Hotel Properties is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, the poor dividend history, and the high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from 34 cents in 2013 to an estimated $1.35 for 2017. This level of demonstrated earnings growth outpaces the market's implied estimate of 6.66% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into LaSalle Hotel Properties revealed the company was trading above its Graham Number of $5.83. The company pays a dividend of $3.01 per share, for a yield of 10.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share - ModernGraham) was 21.82, which was below the industry average of 31.91, which by some methods of valuation makes it one of the most undervalued stocks in its industry. 

LGI Homes Inc. (NASDAQ:LGIH)

LGI Homes Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability over the last 10 years and the poor dividend history. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from 39 cents in 2013 to an estimated $2.76 for 2017. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.6% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into LGI Homes Inc. revealed the company was trading below its Graham Number of $36.13. The company does not pay a dividend. Its PEmg (price over earnings per share - ModernGraham) was 11.7, which was below the industry average of 28.49, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $15.24.

Torchmark Corp. (NYSE:TMK)

Torchmark Corp. qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company's strong financial position. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.33 in 2013 to an estimated $4.38 for 2017. This level of demonstrated earnings growth supports the market's implied estimate of 4.7% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Torchmark Corporation revealed the company was trading above its Graham Number of $63.73. The company pays a dividend of $0.56 per share, for a yield of 0.7% Its PEmg (price over earnings per share - ModernGraham) was 17.9, which was below the industry average of 18.78, which by some methods of valuation makes it one of the most undervalued stocks in its industry. 

The good

The following companies were found to be suitable for the Defensive Investor or Enterprising Investor and Fairly Valued:

Schweitzer-Mauduit International Inc. (NYSE:SWM)

Schweitzer-Mauduit International Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the small size. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.33 in 2013 to an estimated $2.91 for 2017. This level of demonstrated earnings growth supports the market's implied estimate of 2.71% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Schweitzer-Mauduit International, Inc. revealed the company was trading above its Graham Number of $34.35. The company pays a dividend of $1.62 per share, for a yield of 4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share - ModernGraham) was 13.92, which was below the industry average of 28.3, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.88. 

Standex International Corp (NYSE:SXI)

Standex International Corp. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.64 in 2013 to an estimated $4.06 for 2017. This level of demonstrated earnings growth supports the market's implied estimate of 7.77% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Standex International Corp. revealed the company was trading above its Graham Number of $53.86. The company pays a dividend of $0.58 per share, for a yield of 0.6% Its PEmg (price over earnings per share - ModernGraham) was 24.04, which was above the industry average of 22.25. Finally, the company was trading above its Net Current Asset Value (NCAV) of $2.04. 

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours. See my current holdings here. This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions. ModernGraham is not affiliated with the company in any manner. Please be sure to review our detailed disclaimer. This article first appeared on ModernGraham.

About the author:

Benjamin Clark
Benjamin is one of TipRank's top bloggers. He is the founder of ModernGraham.com, a value investing website devoted to the study and modernization of the teachings of Benjamin Graham.

Visit Benjamin Clark's Website


Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:


GuruFocus has detected 1 Warning Sign with LGI Homes Inc $LGIH.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.

User Generated Screeners


alphahsHSValGrowth
hcgaron3rd F-Screen
shadowarriorFCF Eur
shadowarriorvalueEur
DANGORDONJ GREEN 3-28-17
murph4297Rick1
whstock32LFCF-dd
shortstackGoldMamba
kalletalPeter Lynch
kalletalJoel Greenblatt
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK