A Trio of Graham-Style Stocks to Consider

These companies could be bargain opportunities

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Sep 29, 2022
Summary
  • Valley National Bancorp, Earthstone Energy Inc. and State Street Corporation have Graham blended multipliers below 22.5.
  • Wall Street also likes these stocks.
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To increase their chances of discovering value opportunities, value investors may want to look for stocks whose Graham blended multipliers are below 22.5. Created by Benjamin Graham, the father of value investing, the multiplier is equal to the stock's price-earnings ratio times its price-book ratio.

Therefore, value investors could be interested in the following stocks, as they meet the above criteria and are favored by Wall Street analysts.

Valley National Bancorp

The first stock that meets the criteria is Valley National Bancorp (

VLY, Financial), a New York-based holding company of Valley National Bank. The bank provides a variety of commercial, retail, insurance and wealth management financial services through approximately 232 branch offices in New Jersey, New York, Florida and Alabama.

The stock has a Graham blended multiplier of 9.6 as the price-earnings ratio is 10.54 and the price-book ratio is 0.91.

Valley National Bancorp was trading at $10.85 per share during regular hours on Thursday, giving it a market cap of approximately $5.39 billion. The stock was down 18.48% year over year, trading in a 52-week range of $10.01 to $15.10.

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GuruFocus assigned a rating of 4 out of 10 to the company's financial strength and 5 out of 10 to its profitability.

Valley National Bancorp pays quarterly dividends. The company will pay 11 cents per common share on Oct. 3, resulting in trailing 12-month and forward dividend yields of 4.16% as of this writing.

On Wall Street, analysts have recommended a median rating of overweight for the stock with an average target price of $14.45 per share.

Earthstone Energy Inc.

The second company that makes the cut is Earthstone Energy Inc. (

ESTE, Financial), an independent oil and gas company based in The Woodlands, Texas. It is engaged in the acquisition, exploration, development and production of hydrocarbon assets in the United States. The company has mineral activities in the Midland Basin of West Texas, the Delaware Basin of New Mexico and the Eagle Ford Trend of South Texas. At the end of 2021, it was drilling 120 gross wells in the Eagle Ford Shale and had 147.6 million barrels of oil equivalent in proven reserves, of which 63.4% are developed while the remaining 36.6% are undeveloped ore resources.

The stock has a Graham blended multiplier of 4.86 as the price-earnings ratio is 6.48 and the price-book ratio is 0.75.

Earthstone Energy Inc. traded at $11.98 per share during regular hours on Thursday, determining a market capitalization of $1.30 billion. The stock has risen by 30.22% over the past year, fluctuating in a 52-week range of $8.71 to $22.25.

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GuruFocus assigned a rating of 4 out of 10 to the company's financial strength and 8 out of 10 to its profitability.

Earthstone Energy Inc. does not pay dividends.

On Wall Street, the stock has a median recommendation rating of overweight and an average target price of $28.86 per share.

State Street Corporation

The third company that qualifies is State Street Corporation (

STT, Financial), a Boston, Massachusetts-based asset management firm providing various financial products and services to institutional investors operating in global markets across 100 different geographic areas. At the end of 2021, the firm's assets under custody and administration were valued at approximately $43.7 trillion, while assets under management were valued at approximately $4.1 trillion.

The stock has a Graham blended multiplier of 7.69 as the price-earnings ratio is 8.36 and the price-book ratio is 0.92.

State Street Corporation traded at $61.69 per share during regular hours on Thursday, determining a market capitalization of $22.17 billion. The stock has fallen by 27.18% over the past year, determining a 52-week range of $58.79 to $104.87.

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GuruFocus assigned a rating of 4 out of 10 to the company's financial strength and 6 out of 10 to its profitability.

State Street Corporation pays quarterly dividends. The company will pay 63 cents per common share on Oct. 13 for a trailing 12-month dividend yield of 3.79% and a forward dividend yield of 4.19% as of this writing.

On Wall Street, analysts have recommended a median rating of overweight with an average target price of $80.64 per share for the stock.

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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