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Alberto Abaterusso
Alberto Abaterusso
Articles (2327) 

A Trio of Stock Picks Trading Below the Graham Number

They could be potential bargain opportunities

September 25, 2020 | About:

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 (NYSE:VST), 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 (NASDAQ:WIRE), 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 (NYSE:COP), 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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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about gold, silver and precious metals mining industries. My articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. I hold a Master's Degree in Business Administration from Università degli Studi di Bari (Italy), Aldo Moro. I am based in The Netherlands.

You can follow me on Twitter at https://twitter.com/AAbaterusso

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