One way to unearth value opportunities is to screen the market for stocks that are trading below the Graham Number, as such stocks could be trading at discount to their intrinsic value. The Graham Number is calculated as the square root of "earnings per share times book value per share times 22.5."
Thus, investors may want to have a look at the following large-cap stocks, as they are trading below their Graham Numbers.
PetroChina Co Ltd
The first stock to consider is PetroChina Co Ltd (PTR, Financial), a Chinese oil and gas corporation.
The stock traded at a price of $38.69 per share at close on Friday, which is below the Graham Number of $56.32 as of the September 2020 quarter, for a price-to-Graham-Number ratio of 0.69.
The share price has risen over the past year by 27.1% for a market capitalization of $71.32 billion and a 52-week range of $27.68 to $41.20.
GuruFocus has assigned a score of 5 out of 10 for the company's financial strength and 6 out of 10 for its profitability.
On Wall Street, the stock has a median recommendation rating of overweight with an average price target of $50.97 per share.
The company's top fund holder is Jim Simons (Trades, Portfolio) with 0.06% of shares outstanding, followed by Arrowstreet Capital Limited Partnership with 0.03% and CI Investments Inc. with 0.03%.
Goldman Sachs Group Inc
The second stock to consider is Goldman Sachs Group Inc (GS, Financial), a New York-based financial services giant serving corporations, financial institutions, governments and individuals worldwide.
The stock traded at a price of $348.81 per share at close on Friday, which is below the Graham Number of $358.94 as of the December 2020 quarter, for a price-to-Graham-Number ratio of approximately 0.97.
The stock has risen 124.31% over the past year for a market capitalization of $119.82 billion and a 52-week range of $130.85 to $352.38.
GuruFocus has assigned a score of 3 out of 10 for the company's financial strength and 6 out of 10 for its profitability.
On Wall Street, the stock has a median recommendation rating of overweight with an average price target of $345.46 per share.
Vanguard Group Inc, BlackRock Inc. and State Street Corp are among the largest fund holders, owning 7.45%, 6.13% and 5.77% of the company's shares outstanding, respectively.
ING Groep NV
The third company to consider is ING Groep NV (ING, Financial), a Dutch bank major.
The stock was trading at a price of $12.04 per share at close on Friday, which is below the Graham Number of $13.60 as of the September 2020 quarter, for a price-to-Graham-Number ratio of 0.89.
As a result of a 144.5% increase in its share price over the past year, the stock has a market capitalization of around $46.73 billion and a 52-week range of $4.52 to $12.55.
GuruFocus has assigned a score of 3 out of 10 for both the company's financial strength and its profitability.
On Wall Street, the stock has a median recommendation rating of overweight with an average price target of $12.53 per share.
Ken Fisher (Trades, Portfolio), Wellington Management Group LLP and Parametric Portfolio Associates LLC are among the largest top fund holders of the company, owning 1.01%, 0.25% and 0.14% of shares outstanding, respectively.
Disclosure: I have no positions in any security mentioned in this article.
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