To increase the effectiveness of their search, value investors may want to consider stocks whose "Graham blended multiplier” is 22.5 or less. Developed by Benjamin Graham, the pioneer of value investing, the multiplier equals the stock’s price-earnings ratio times its price-book ratio.
Thus, value investors may want to consider the following three stocks, as their Graham blended multipliers stand below 22.5.
Sykes Enterprises Inc
The first stock to consider is Sykes Enterprises Inc (SYKE, Financial), a Tampa, Florida-based international provider of business process outsourcing services.
Sykes Enterprises Inc’s stock price was trading at $27.25 per share at close on June 23 for a market capitalization of $1.1 billion.
The stock has a Graham blended multiplier of 22.35, as the price-earnings ratio is 16.93 (versus the industry median of 25.31) and the price-book ratio is 1.32 (versus the industry median of 2.88).
The share price has risen nearly 3% in the past year for a 52-week range of $22.12 to $38.24.
Currently, Sykes Enterprises Inc does not pay dividends.
GuruFocus assigned a very good score of 7 out of 10 for both the company’s financial strength and its profitability.
Wall Street sell-side analysts issued an overweight recommendation rating for the stock with an average target price of $34 per share.
Herc Holdings Inc
The second stock to consider is Herc Holdings Inc (HRI, Financial), a Bonita Springs, Florida-based global supplier of equipment rental.
Herc Holdings Inc’s stock price was trading at $28.53 per share at close on June 23 for a market capitalization of $828.79 million.
The stock has a Graham blended multiplier of 21.72, as the price-earnings ratio is 16.58 (versus the industry median of 15.77) and the price-book ratio is 1.31 (versus the industry median of 1.57).
The share price has fallen by nearly 35% in the past year, determining a 52-week range of $11.81 to $50.81.
GuruFocus assigned a low rating of 3 out of 10 for the company’s financial strength and a positive rating of 6 out of 10 for its profitability.
Wall Street sell-side analysts issued an overweight recommendation rating for the stock with an average target price of $34.14 per share.
First National Bank Alaska
The third company to consider is First National Bank Alaska (FBAK, Financial), an Anchorage, Alaska-based regional bank.
First National Bank Alaska’s stock price was trading at $190 per share at close on June 23 for a market capitalization of $601.83 million.
The stock has a Graham blended multiplier of 11.79, as the price-earnings ratio is 10.82 (versus the industry median of 9.22) and the price-book ratio is 1.09 (versus the industry median of 0.76).
The share price has fallen 20.8% in the past year for a 52-week range of $125 to $275.25.
Currently, the Alaskan regional bank pays a quarterly dividend of $3.20 per share. The bank has been distributing dividends since 1991.
GuruFocus assigned a positive rating of 5 out of 10 for the company’s financial strength and a moderate rating of 4 out of 10 for its profitability.
Disclosure: I have no positions in any securities mentioned.
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