Benjamin Graham, the father of value investing and author of "The Intelligent Investor," suggested to look for stocks whose "Graham blended multiplier" stands below 22.5. The Graham blended multiplier is the price-earnings ratio multiplied by the price-book ratio. Such securities could be trading at a discount to their intrinsic value, enhancing the likelihood of value opportunities.
Thus, value investors may want to consider the following three stocks, as their Graham blended multipliers are below 22.5.
JPMorgan Chase & Co
The first stock investors may want to consider is American bank major JPMorgan Chase & Co (JPM, Financial).
The stock has a Graham blended multiplier of 18.06, as the price-earnings ratio is 13.58 (versus the industry median of 9.37) and the price-book ratio is 1.33 (versus the industry median of 0.75).
JPMorgan Chase & Co's stock price was trading at $100.64 per share at close on Aug. 10 for a market capitalization of $306.71 billion.
The share price fell by 6.6% over the past year, which determined a 52-week range of $76.91 to $141.10.
The stock offers trailing 12-month and forward dividend yields of 3.56% as of Aug. 10.
GuruFocus assigned a low score of 3 out of 10 to the company's financial strength and a positive score of 5 out of 10 to its profitability.
As of August, Wall Street sell-side analysts recommend four strong buy ratings, nine buy ratings, 13 hold ratings, one underperform rating and one sell rating for the stock. The average target price stands at $115 per share.
PPL Corp
The second stock investors should consider is PPL Corp (PPL, Financial), an Allentown, Pennsylvania-based utility company that generates electricity in Kentucky and supplies it to its customers in several U.S. states as well as overseas in the United Kingdom. The company is also a natural gas distributor in Kentucky.
The stock has a Graham blended multiplier of 19.42, as the price-earnings ratio is 11.7 (compared to the industry median of 16.68) and the price-book ratio is 1.66 (versus the industry median of 1.46).
PPL Corp's stock price was trading at $28.65 per share at close on Aug. 10 for a market capitalization of $22.03 billion.
The share price has fallen slightly by 2.3% over the past year for a 52-week range of $18.12 to $36.83.
The stock grants a trailing 12-month dividend yield of 5.77% and a forward dividend yield of 5.79% as of Aug. 10. The company has been paying dividends for nearly two decades.
GuruFocus assigned a low rating of 3 out of 10 to the company's financial strength and a positive rating of 6 out of 10 to its profitability.
As of August, Wall Street sell-side analysts recommend two strong buy ratings, one buy rating and 12 hold ratings for the stock. The average target price has been established at $29.04 per share.
Tyson Foods Inc
The third company under consideration is Tyson Foods Inc (TSN, Financial), a Springdale, Arkansas-based global food company offering beef, chicken and pork as well as processed, fresh and refrigerated food products to retailers and wholesalers.
The stock has a Graham blended multiplier of 20.52, as the price-earnings ratio is 12.99 (versus the industry median of 19.46) and the price-book ratio is 1.58 (versus the industry median of 1.43).
Tyson Foods Inc was trading at $64.56 per share at close on Aug. 10 for a market capitalization of $23.52 billion.
The share price has declined by about 27% over the past year for a 52-week range of $42.57 to $94.24.
The stock grants a trailing 12-month dividend yield of 2.52% and a forward dividend yield of 2.6% as of Aug. 10. The company has been paying dividends for more than three decades.
GuruFocus assigned a positive score of 5 out of 10 to the company's financial strength rating and a very good score of 7 out of 10 to its profitability rating.
As of August, Wall Street sell-side analysts recommend four strong buy ratings, seven buy ratings and five hold ratings for the stock with a price target of $73.41 per share.
Disclosure: I have no positions in any securities mentioned.
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