If you select U.S. stocks that are trading below the Graham Number, which is an approximation for intrinsic value, you could have a higher chance to identify bargains, as such stocks are likely to be undervalued.
The Graham Number is calculated as the square root of "book value per share x 1.5 x trailing 12-month earnings per share x 15."
Vistra Corp
The first stock that makes the cut is Vistra Corp (VST, Financial), an Irving, Texas-based independent producer of power.
The stock traded at a price of $17.99 per share at close on Thursday and has a Graham Number of 20.30.
The stock price has fallen by 33% over the past year, determining a market capitalization of $8.79 billion and a 52-week range of $11.30 to $27.96.
GuruFocus has assigned a score of 3 out of 10 for the company's financial strength and a score of 5 out of 10 for its profitability.
Wall Street recommends a buy rating and an average price target of $29.55 per share of Vistra Corp.
The company's top fund holder is Vanguard Group Inc with 9.76% of shares outstanding, followed by Howard Marks with 6.19% and BlackRock Inc. with 5.53%.
Encore Wire Corp
The second stock that qualifies is Encore Wire Corp (WIRE, Financial), a McKinney, Texas-based manufacturer and seller of electrical building wires and cables.
The stock traded at a price of $46.13 per share at close on Thursday, which is below the Graham Number of 48.95.
The stock price has decreased by 18.8% over the past year, determining a market capitalization of $951.74 million and a 52-week range of $38.01 to $62.08.
GuruFocus has assigned a score of 10 out of 10 for the company's financial strength and a score of 7 out of 10 for its profitability.
Wall Street recommends an overweight rating and has set an average target price of $57.50 per share of Encore Wire Corp.
BlackRock Inc. and Vanguard Group Inc lead the group of top fund holders of the company, owning 15.42% and 9.93%, respectively.
ConocoPhillips
The third stock that meets the criteria is ConocoPhillips (COP, Financial), a Houston, Texas-based oil and gas exploration and producing company.
The stock traded at a price of $33.60 per share at close on Thursday, which is below the Graham Number of 36.7.
The share price has declined by 41.7% over the past year, determining a market capitalization of $36.04 billion and a 52-week range of $20.84 to $67.13.
GuruFocus has assigned a score of 5 out of 10 for the company's financial strength and a score of 6 out of 10 for its profitability.
The company's top fund holder is Vanguard Group Inc with 8.55% of shares outstanding, followed by BlackRock Inc. with 8.04% and State Street Corp with 5.02%.
Disclosure: I have no positions in any security mentioned in this article.
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