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Alberto Abaterusso
Alberto Abaterusso
Articles (2083) 

3 Reasonably Priced Stocks for the Value Investor

Their Graham blended multiplier is below 22.5

January 15, 2020 | About:

You can improve the effectiveness of your search for value opportunities if you look for reasonably priced stocks during the screening. This is what Benjamin Graham, the pioneer of value investing, suggested as a shortcut: multiply the stock’s price-earnings ratio by its price-book ratio to obtain the so-called "Graham blended multiplier," with the ideal result for investment being below 22.5. Ann ideal result may be an indication that the stock is trading at a certain discount to its intrinsic value.

Thus, the following securities attract the interest of value investors, as their Graham blended multiplier is below 22.5.

KB Home

The first company that displays the screening criteria is KB Home (NYSE:KBH).

Shares of the Los Angeles-based homebuilder were trading at a price of $36.10 per unit at close on Jan. 14 for a market capitalization of $3.19 billion.

The stock has a Graham blended multiplier of 17.92, as the price-earnings ratio is 12.62 and the price-book ratio is 1.42. The industry has a median of 10.37 for the price-earnings ratio and a median of 1.29 for the price-book ratio.

In the past year through Jan. 14, the share price has risen 76% to trade above the 200-, 100- and 50-day simple moving average lines.

The 52-week range is $19.26 to $37.59.

The dividend yield is 0.64% versus the industry median of 3.63% as of Jan. 14. The company is currently paying a quarterly cash dividend of 9 cents per common share. This stock has been paying dividends for about 34 years.

Wall Street issued an overweight recommendation rating for shares of KB Home and has set an average target share price of $40.

Investar Holding

The second company that has the above-listed criteria is Investar Holding Corporation (NASDAQ:ISTR).

Shares of the Baton Rouge, Louisiana-based holding of a regional bank traded at a price of $24.00 per unit at close on Jan. 14 for a market capitalization of $269.37 million.

The stock has a Graham blended multiplier of 16.15, as the price-earnings ratio is 14.29 and the price-book ratio is 1.13. The industry has a median of 11.98 for the price-earnings ratio and of 1.06 for the price-book ratio.

In the past year through Jan. 14, the share price rose 2% to trade above the 200-day simple moving average line. The share price is still below the 100- and 50-day SMA lines.

The 52-week share price range is $21.48 to $26.46.

The dividend yield is 0.95% versus the industry median of 3% as of Jan. 14. The next dividend payment will take place on Jan. 31. The company is currently paying a quarterly cash dividend of 6 cents per common share. Investar Holding has been paying dividends for approximately six years.

Wall Street issued an overweight recommendation rating and has set an average target share price of $27.56.

Community West Bancshares

The third company that meets the above-listed criteria is Community West Bancshares (NASDAQ:CWBC).

Shares of the Goleta, California-based holding of a regional bank closed at $11.11 on Jan. 14 for a market capitalization of $94.07 million.

The stock has a Graham blended multiplier of 17.03, as the price-earnings ratio is 14.43 and the price-book ratio is 1.18. The industry has a median of 11.98 for the price-earnings ratio and of 1.06 for the price-book ratio.

In the past year through Jan. 14, the share price has risen 11% to place significantly above the 200-, 100- and 50-day simple moving average lines.

The 52-week range is $9.54 to $11.86.

The dividend yield is 1.93% versus the industry median of 3% as of Jan. 14. Currently, the company is paying a quarterly cash dividend of 5.5 cents per common share. The bank has been paying dividends for about 12 years.

This stock is not rated on Wall Street.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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