Value Screeners Identify Opportunities for 2023

As investors settle into the New Year, GuruFocus’ value screeners track the stocks that meet the standards of value legends like Benjamin Graham, Peter Lynch, Joel Greenblatt (Trades, Portfolio) and Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio). The screeners also illustrate when a new stock made the value screener.

Premium users can access a wide range of value screeners, including the Ben Graham Net-Net Screener, Undervalued-Predictable Screener, Buffett-Munger Screener, Greenblatt Magic Formula Screener and Peter Lynch Screen. Users can also generate their own value screeners using the All-in-One Screener, which contains over 500 filters including customized filters.

New Graham Net-Net stock: GigaMedia Ltd.

Graham wrote in his book, “The Intelligent Investor,” that the net-net investing approach seeks to invest in stocks that trade below 66% of net current asset value. Table 1 lists the number of net-net stocks for each GuruFocus subscription region as of Friday.

Table 1

On Friday, GigaMedia Ltd. (GIGM, Financial) entered the Ben Graham Net-Net screen as a new stock. The stock traded at $1.34, approximately 33% of its net current asset value of $4.05.

The Taiwan-based company publishes online games like mahjong, Yume 100 and Fun Vegas. The company’s business segments include personal computer-based games, mobile role playing games, mahjong and casino casual games, and other games and game-related revenues. During fiscal 2021, the company reported approximately $2.4 million in personal computer-based games sales, approximately 43.3% of total revenue.

GigaMedia has a GF Score of 56 out of 100: Although the company has a financial strength rank of 10 out of 10 and a GF Value rank of 8 out of 10, the company’s profitability and growth rank 2 out of 10 while its momentum ranks just 1 out of 10.

GigaMedia’s profitability ranks 2 out of 10 on several warning signs, which include a low Piotroski F-score of 1 out of 9, a gross margin that underperforms approximately 53% of global competitors and an operating margin that has declined by approximately 6.8% per year over the past five years and underperforms more than 80% of global interactive media companies.

Despite low profitability, GigaMedia’s financial strength ranks 10 out of 10 on the back of a high Altman Z-score of 3.06 and high interest coverage.

Undervalued-Predictable and Buffett-Munger Screeners

Buffett and Munger’s investing approach considers four key criteria: understandable business, favorable growth prospects, shareholder-oriented management and attractive valuations. GuruFocus’ Buffett-Munger Screener applies the above criteria by listing stocks with high business predictability rank, positive earnings growth over the past 10 years, increasing gross margins over the past five years, low debt-to-assets growth rates and a price-earnings-to-growth ratio less than 2.

Likewise, the undervalued-predictable screener looks for stocks that have high business predictability rank and have high margins of safety based on the discounted cash flow model.

Table 2 lists the number of undervalued-predictable and Buffett-Munger stocks for each GuruFocus subscription region as of Friday.

Table 2

Greenblatt Magic Formula Screen: Nucor

The Greenblatt Magic Formula Screen follows the Gotham Asset Management fund manager’s concept of finding stocks with high earnings yield and return on capital. As of Friday, one of the top-ranked magic formula stocks among the Standard & Poor’s 500 index stocks is Nucor Corp. (NUE, Financial). The stock’s earnings yield of 27.55% outperforms approximately 82% of global competitors, while Nucor’s return on capital of 79.62% outperforms approximately 95% of global competitors.

The Charlotte, North Carolina-based steel company has a GF Score of 89 out of 100, driven by a growth rank of 9 out of 10 and a rank of 8 out of 10 for profitability and financial strength despite momentum ranking 6 out of 10 and GF Value ranking 5 out of 10.

Nucor’s profitability ranks 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 8 out of 9 and an operating margin that has increased by approximately 13.5% per year on average over the past five years and outperforms approximately 94% of global competitors.

Peter Lynch Screen

The Peter Lynch Screen looks for stocks that meet the legendary Fidelity Magellan Fund manager’s criteria to find undervalued stocks. Lynch developed an earnings line chart that compares a company’s share price to its valuation at 15 times earnings per share.

Table 3 lists the number of Peter Lynch stocks for each GuruFocus subscription region as of Friday.

Table 3

Historical Low Price-Book and Low Price-Sales Screeners

The Historical Low Price-Book and Historical Low Price-Sales Screeners look for stocks that have high business predictability, yet are trading less than 50% above their 10-year low price-book or price-sales ratio. Table 4 lists the number of stocks making these two screens for each GuruFocus subscription region as of Friday.

Table 4

Other screeners

Table 5 lists the screener records for other popular screeners, including the 52-week lows screener and the high dividend yield screener.

Table 5