Benjamin Graham, the pioneer of value investing and author of "The Intelligent Investor," suggested to consider stocks whose "Graham blended multiplier," which is the price-earnings ratio multiplied by the price-book ratio, stands below 22.5. Such stock prices could represent a discount to their intrinsic value, increasing the likelihood of value opportunities.
Thus, value investors may want to have a look at the following trio of stocks, as their Graham blended multipliers are less than 22.5.
Affiliated Managers Group Inc
The first stock investors should have a look at is Affiliated Managers Group Inc (AMG, Financial), a West Palm Beach, Florida-based asset management company dedicated to U.S. institutional clients, mutual funds and high net worth individuals.
Affiliated Managers Group Inc’s stock price traded at $74.19 per share at close on July 6 for a market capitalization of $3.5 billion.
The stock has a Graham blended multiplier of 22.16, as the price-earnings ratio is 18.78 (versus the industry median of 11.28) and the price-book ratio is 1.18 (versus the industry median of 0.88).
The share price has fallen 17.12% in the past year, determining a 52-week range of $44.37 to $114.64.
The stock grants a trailing 12-month and forward dividend of 1.3% as of July 6.
GuruFocus assigned a positive score of 5 out of 10 to the company’s financial strength and a very good score of 7 out of 10 to its profitability.
As of July, Wall Street sell-side analysts recommend four strong buy ratings, three buy ratings and two hold ratings for the stock.
Virtus Investment Partners Inc
The second stock investors may want to consider is Virtus Investment Partners Inc (VRTS, Financial), a Hartford, Connecticut-based publicly owned asset management company.
Virtus Investment Partners Inc’s stock price traded at $118.04 per share at close on July 6 for a market capitalization of $908.37 million.
The stock has a Graham blended multiplier of 19.25, as the price-earnings ratio is 13.95 (versus the industry median of 11.28) and the price-book ratio is 1.38 (versus the industry median of 0.88).
The share price has risen by 11.7% in the past year for a 52-week range of $55.37 to $141.79.
The stock grants a trailing 12-month dividend yield of 2.18% and a forward dividend yield of 2.28% as of July 6.
GuruFocus assigned a low rating of 3 out of 10 to the company’s financial strength and a high rating of 8 out of 10 to its profitability.
Wall Street sell-side analysts issued an overweight recommendation rating for this stock.
Denmark Bancshares Inc
The third company investors should take into account is Denmark Bancshares Inc (DMKBA, Financial), a Denmark, Wisconsin-based regional bank.
Denmark Bancshares Inc’s stock price traded at $23.50 per share at close on July 6 for a market capitalization of $75.12 million.
The stock has a Graham blended multiplier of 20.04, as the price-earnings ratio is 17.43 (versus the industry median of 9.11) and the price-book ratio is 1.15 (versus the industry median of 0.75).
The share price has declined 3% in the past year for a 52-week range of $23 to $27.85.
The stock grants a trailing 12-month and forward dividend of 2.51% as of July 6.
GuruFocus assigned a low score of 2 out of 10 to the company’s financial strength rating and a moderate score of 4 out of 10 to its profitability rating.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- 3 Stocks Growing Revenue Fast
- A Trio of High Yield Stocks for the Dividend Investor
- A Trio of Low Price-Book Stocks
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