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Alberto Abaterusso
Alberto Abaterusso
Articles (2476) 

A Trio of Graham-Style Stocks

They could be potential bargain opportunities

November 24, 2020 | About:

To increase the effectiveness of screening for value opportunities, one method is to select stocks whose "Graham blended multiplier" is less than 22.5. Developed by Benjamin Graham, the pioneer of value investing, the multiplier equals the stock's price-earnings ratio multiplied by its price-book ratio.

Thus, value investors may want to consider the following stocks, since their Graham blended multipliers are trading below 22.5.

Highwoods Properties Inc

The first stock investors may want to consider is Highwoods Properties Inc (NYSE:HIW), a Raleigh, North Carolina-based real estate investment trust company focusing on properties located in the best business districts of several U.S. cities, including Atlanta, Orlando and Pittsburgh. The company is also a member of the S&P Midcap 400 Index.

The stock has a Graham blended multiplier of 21.12, as the price-earnings ratio is 12.21 (versus the industry median of 18.85) and the price-book ratio is 1.73 (versus the industry median of 0.97).

Highwoods' stock price traded at $38.08 per share at close on Nov. 23 for a market capitalization of $3.96 billion.

The share price has fallen nearly 20% over the past year for a 52-week range of $25.10 to $52.76.

On Dec. 8, the company will pay a quarterly cash dividend of 48 cents per common share, producing a forward dividend yield of 5.05% as of Nov. 23.

GuruFocus assigned a score of 3 out of 10 to the company's financial strength and of 7 out of 10 to its profitability.

As of November, sell-side analysts on Wall Street recommend three strong buys and eight holds for an average target price of $41.18 per share.

Piedmont Office Realty Trust Inc

The second stock investors should consider is Piedmont Office Realty Trust Inc (NYSE:PDM), an Atlanta, Georgia-based real estate investment trust company focusing on top class office properties located in seven of the most important office markets of the Eastern U.S. region.

The stock has a Graham blended multiplier of 5.95, as the price-earnings ratio is 5.56 (versus the industry median of 18.85) and the price-book ratio is 1.07 (versus the industry median of 0.97).

Piedmont's stock price traded at $16.41 per share at close on Nov. 23 for a market capitalization of $2.07 billion.

The share price has fallen by 24.74% over the past year, determining a 52-week range of $11.26 to $24.78.

On Jan. 4, 2021, the company will distribute a quarterly cash dividend of 21 cents per common share, generating a forward dividend yield of 5.12% as of Nov. 23.

GuruFocus assigned a rating of 3 out of 10 to the company's financial strength and a rating of 6 out of 10 to its profitability.

As of November, sell-side analysts on Wall Street recommend one strong buy rating and four hold ratings for an average target price of about $18.67 per share.

First Financial Northwest Inc

The third company investors may want to consider is First Financial Northwest Inc (NASDAQ:FFNW), the Renton, Washington-based holder of First Financial Northwest Bank, a regional provider of commercial banking services to individuals, households and businesses in Washington.

The stock has a Graham blended multiplier of 9.64, as the price-earnings ratio is 13.21 (versus the industry median of 11.07) and the price-book ratio is 0.73 (versus the industry median of 0.83).

First Financial Northwest's stock price traded at $11.36 per share at close on Nov. 23 for a market capitalization of $111.17 million.

The share price has fallen 23.4% over the past year for a 52-week range of $7.90 to $15.47.

GuruFocus assigned a score of 2 out of 10 to the company's financial strength rating and a score of 5 out of 10 to its profitability rating.

As of November, sell-side analysts on Wall Street recommend four hold ratings for an average target price of $12.63 per share.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
I am a contributor at GuruFocus. I primarily write about how to pick potential value stocks. Gold, silver and precious metals mining industries is also my cup of tea. 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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