You can enhance the effectiveness of your search for value opportunities if you pick reasonably or undervalued stocks. This is what Benjamin Graham, the father of value investing, suggested to do: multiply the stock’s price-earnings ratio by its price-book ratio to create what is known as the "Graham blended multiplier," then pick those stocks whose blended multiplier is less than 22.5.
Thus, value investors may be interested in the following securities, since they have a Graham blended multiplier of less than 22.5.
Zimmer Biomet Holdings
The first company that meets the above-listed criteria is Zimmer Biomet Holdings Inc (ZBH, Financial), a Warsaw, Indiana-based designer, manufacturer and marketer of medical devices.
The stock has a Graham blended multiplier of 19.67, as the price-earnings ratio is 14.79 and the price-book ratio is 1.33. The industry has a median of 25.2 for the price-earnings ratio and a median of 2.49 for the price-book ratio. Further, below Peter Lynch chart says that the stock is not expensive.
Shares were trading at a price of $80.81 per unit at close on March 23 for a market capitalization of $16.68 billion. The 52-week range is $74.37 to $161.11. The stock grants a dividend yield of 1.2% as of March 23.
Wall Street issued an overweight recommendation rating for shares of Zimmer Biomet Holdings Inc and has established an average target share price of $171.81.
Juniper Networks
The second company that meets the above-listed criteria is Juniper Networks Inc (JNPR, Financial), a Sunnyvale, California-based designer, developer and seller of communication apparatuses worldwide.
The stock has a Graham blended multiplier of 21.77, as the price-earnings ratio is 17.28 and the price-book ratio is 1.26. The industry has a median of 13.83 for the price-earnings ratio and of 1.14 for the price-book ratio. Also, below Peter Lynch chart suggests that this stock is still affordable.
Shares closed at a price of $17.28 per unit on March 23 for a market capitalization of $5.71 billion. The 52-week share price range is $15.20 to $28.77. The stock has a dividend yield of 4.46%.
Wall Street issued a hold recommendation rating for shares of Juniper Networks Inc and has established an average target price of $23.04 per share.
Omega Healthcare Investors
The third company that meets the above-listed criteria is Omega Healthcare Investors Inc (OHI, Financial), a Hunt Valley, Maryland-based real estate investment trust with interests in the healthcare industry.
The stock has a Graham blended multiplier of 17.32, as the price-earnings ratio is 14.08 and the price-book ratio is 1.23. The industry has a median of 10.83 for the price-earnings ratio and of 0.75 for the price-book ratio. Moreover, below Peter Lynch chart indicates that this stock is not expensive.
Shares traded at a price of $22.24 per unit on March 23 for a market capitalization of $5.04 billion. The stock has a 52-week range of $13.33 to $45.22 and grants a dividend yield of 11.98%.
Wall Street issued an overweight recommendation rating for shares of Omega Healthcare Investors Inc and has established an average target price of $40.70 per share.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- A Trio of Strong Performers to Hold
- Wall Street Recommends Reducing These Holdings
- A Trio of High-Yield Dividend Stocks
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