One way to discover value opportunities is to screen the market for stocks trading below the Graham Number, as such stocks could be trading below their intrinsic value.
The Graham Number is calculated as the square root of "earnings per share x book value per share x 22.5."
Forestar Group Inc
The first stock that makes the cut is Forestar Group Inc (FOR, Financial), an Arlington, Texas-based real estate operator that acquires, develops and sells residential properties to homebuilders.
The stock traded at a price of $19.12 per share at close on Monday, which is below the Graham Number of 20.49, for a price-to-Graham-Number ratio of 0.93.
The stock price has risen 2.63% over the past year, determining a market capitalization of $918.91 million and a 52-week range of $9.43 to $23.11.
GuruFocus has assigned a score of 4 out of 10 for the company's financial strength and a score of 5 out of 10 for its profitability.
As of October, the stock has a buy recommendation rating with an average price target of $21 per share on Wall Street.
With 9.74% of shares outstanding, Long Pond Capital, LP is the company's top fund holder, followed by VANGUARD GROUP INC with 4.88% and BlackRock Inc. with 2.94%.
Silvergate Capital Corp
The second stock that makes the cut is Silvergate Capital Corp (SI, Financial), the La Jolla, California-based holder of Silvergate Bank, a regional bank serving U.S. business and individual clients.
The stock traded at a price of $16.14 per share at close on Monday, which is significantly below the Graham Number of 18.57, for a price-to-Graham-Number ratio of 0.87.
The stock price has risen 28.91% over the past year for a market capitalization of $301.44 million and a 52-week range of $7.60 to $16.95.
GuruFocus has assigned a score of 2 out of 10 for the company's financial strength and a score of 1 out of 10 for its profitability.
As of October, the stock has an overweight recommendation rating with an average target price of $18.33 per share on Wall Street.
The company's top fund holder is RIMA SENVEST MANAGEMENT, L.L.C. with 7.54% of shares outstanding, followed by Park West Asset Management LLC with 6.26% and FJ Capital Management LLC with 5.43%.
Energy Company of Minas Gerais
The third stock that makes the cut is Energy Company of Minas Gerais (CIG, Financial), a Brazilian generator and distributor of electricity in Brazil.
The stock traded at a price of $1.99 per share at close on Monday, which is significantly below the Graham Number of 3.26, for a price-to-Graham-Number ratio of 0.61.
The share price has fallen by 35.54% in the past year, fluctuating in a 52-week range of $1.23 to $3.60. The stock has a market capitalization of $2.37 billion.
GuruFocus has assigned a score of 4 out of 10 for the company's financial strength and a score of 7 out of 10 for its profitability.
As of October, the stock has an overweight recommendation rating with an average target price of $2.60 per share on Wall Street.
The company's top fund holder is BlackRock Inc. with 2.53% of shares outstanding, followed by VANGUARD GROUP INC with 0.39% and AQR CAPITAL MANAGEMENT LLC with 0.28%.
Disclosure: I have no positions in any security mentioned in this article.
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