When looking for stocks that are trading at or below their fair prices, one tool investors can use is the earnings power value (EPV).
The EPV was created by Bruce Greenwald, a former professor at Columbia University and a famous value investor. Greenwald was looking for ways to bypass the series of guesswork choices that must be made when trying to assess the intrinsic value of a stock through the discounted cash flow valuation model. The EPV is calculated as the adjusted earnings divided by the weighted average cost of capital.
The stocks listed below seem fairly priced as their share prices are trading lower than their respective EPVs.
Bank Hapoalim BM
The first stock that holds the criteria is Bank Hapoalim BM (BKHYY, Financial), a Tel Aviv, Israel-based regional bank providing various banking and financial products and services to individuals and companies in Israel and internationally.
Bank Hapoalim BM's EPV is $157.83 per share (as of the June 2021 quarter), which is well above the share price of $43.73 as of early trading on Monday, for a margin of safety of about 71.58%.
Due to a 49.1% rise in the share price which happened over the past year, the market capitalization is $11.69 billion. The 52-week range is $25.85 to $44.85.
GuruFocus has assigned a score of 3 out of 10 to the company's financial strength and 4 out of 10 to its profitability.
Parametric Portfolio Associates LLC is a top fund holder of the company with 0.01% of shares outstanding.
Ageas SA/ NV
The second stock that holds the criteria is Ageas SA/ NV (AGESY, Financial), an insurance company offering various products and services to individuals and businesses in Europe and Asia.
Ageas SA/ NV's EPV is $347.33 per share (as of the June 2021 quarter), which is sky-high compared to the share price of $50.90 as of early trading on Monday, for a margin of safety of 85.35%.
Following a 15.6% increase in the share price that occurred over the past year, the market capitalization now trades near $9.54 billion. The 52-week range is $38.79 to $67.11.
GuruFocus has assigned a score of 4 out of 10 to the company's financial strength rating and of 5 out of 10 to its profitability rating.
Parametric Portfolio Associates LLC is a top fund holder of the company, as it holds 0.26% of shares outstanding.
Reinsurance Group of America Inc
The third stock that holds the criteria is Reinsurance Group of America Inc (RGA, Financial), a Chesterfield, Missouri-based reinsurance firm serving life insurance companies in the United States and internationally.
Reinsurance Group of America Inc's EPV is $839.51 per share (as of the June 2021 quarter), which is significantly higher than the share price of $116.80 as of early trading on Monday, determining a margin of safety of about 86%.
Following a nearly 23% increase in the share price over the past year, the market capitalization is now approximately $7.92 billion. The 52-week range is $90.05 to $134.93.
GuruFocus has assigned a score of 4 out of 10 to the company's financial strength and a score of 5 out of 10 to its profitability.
Vanguard Group Inc dominates in the group of the top fund holders of the company with 10.20% of shares outstanding. It is followed by BlackRock with 9.59% and FMR LLC with 8.20% of shares outstanding.
Disclosure: I have no positions in any securities mentioned.
