Benjamin Graham, the father of value investing and author of "The Intelligent Investor," advised value investors to screen for stocks whose "Graham blended multiplier" stood below 22.5. Such stocks could be trading at a discount to their intrinsic value, enhancing the likelihood to come across value opportunities. The Graham blended multiplier is the price-earnings ratio multiplied by the price-book ratio.
Thus, value investors may want to consider the following three stocks, as their Graham blended multipliers stand below 22.5.
Leju Holdings Ltd
The first stock to consider is Leju Holdings Ltd (LEJU, Financial), a Chinese provider of online to offline (O2O) real estate services to consumers in the People's Republic of China.
The stock has a Graham blended multiplier of 14.2 as the price-earnings ratio is 12.88 (versus the industry median of 12.39) and the price-book ratio is 1.1 (versus the industry median of 0.8).
Leju Holdings Ltd's stock traded at $2.06 per share at close on Oct. 6 for a market capitalization of $280.11 million.
The share price has risen 5.1% over the past year, determining a 52-week range of $1.03 to $6.96.
The company is currently not distributing dividends to its shareholders.
GuruFocus assigned a score of 7 out of 10 to the company's financial strength and a score of 7 out of 10 to its profitability.
On Wall Street, the stock has a hold recommendation rating with a target price of $3.60 per share.
Amid the top fund holders of the company, Jim Simons is the leader with 1% of shares outstanding, followed by ACADIAN ASSET MANAGEMENT LLC with 0.27% of shares outstanding and Russell Investments Group, Ltd. with 0.04% of shares outstanding.
Juniata Valley Financial Corp
The second stock to consider is Juniata Valley Financial Corp (JUVF, Financial), the Mifflintown, Pennsylvania-based holder of The Juniata Valley Bank, which is a regional bank serving retail and small and mid-sized commercial clients in central and northern Pennsylvania.
The stock has a Graham blended multiplier of 20.8 as the price-earnings ratio is 17.62 (versus the industry median of 9.74) and the price-book ratio is 1.18 (versus the industry median of 0.74).
Juniata Valley Financial Corp's stock traded at $17.80 per share at close on Oct. 6, determining a market capitalization of $90.54 million.
The share price has fallen by 10.6% over the past year for a 52-week range of $8.35 to $20.25.
Currently, the company pays a quarterly cash dividend of 22 cents per common share, generating trailing 12-month and forward dividend yields of 4.94% as of Oct. 6.
GuruFocus assigned a rating of 3 out of 10 to the company's financial strength and a rating of 4 out of 10 to its profitability.
Fonar Corp
The third company to consider is Fonar Corp (FONR, Financial), a Melville, New York-based developer of magnetic resonance imaging scanners for human diseases detection and diagnosis in the U.S.
The stock has a Graham blended multiplier of 20.95 as the price-earnings ratio is 18.54 (versus the industry median of 34.62) and the price-book ratio is 1.13 (versus the industry median of 4.2).
Fonar Corp traded at $21.69 per share at close on Oct. 6 for a market capitalization of $142.61 million.
The share price has risen by nearly 10% over the past year, determining a 52-week range of $11 to $26.49.
The company is currently not distributing dividends to its shareholders.
GuruFocus assigned a score of 7 out of 10 to both the company's financial strength rating and its profitability rating.
KAYNE ANDERSON RUDNICK INVESTMENT MANAGEMENT LLC dominates the group of top fund holders of the company, owning 11.92% of shares outstanding. It is followed by VANGUARD GROUP INC with 7.52% of shares outstanding and Jim Simons with 7.23% of shares outstanding.
Disclosure: I have no positions in any securities mentioned.
Read more here:
- 2 Underperforming Holdings to Ease Up On
- 3 Proposals for Growth-Focused Investors
- A Trio of Potential Bargains for the Value Investor
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