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Alberto Abaterusso
Alberto Abaterusso
Articles (1790) 

Value Investors May Be Interested in These 3 Fairly Priced Stocks

Regal Beloit tops the list

December 02, 2019 | About:

Benjamin Graham, the pioneer of value investing, co-author with David Dodd of "Security Analysis" and author of "The Intelligent Investor," suggested looking for stocks whose price-earnings ratio multiplied by the price-book ratio gives a result of less than 22.5. Why? Because these stocks are likely trading at discount to their intrinsic value.

Thus, the following securities have a Benjamin Graham Blended Multiplier below 22.5.

Regal Beloit

The first company is Regal Beloit Corp. (NYSE:RBC).

Shares of the Beloit, Wisconsin-based manufacturer and seller of electric engines and power generation and transmission products closed at $81.73 on Friday for a market capitalization of $3.35 billion.

The stock has a Graham blended multiplier of 19.72, as the price-earnings ratio is 13.6 and the price-book ratio is 1.45. The industrial products industry has a median of 17.55 for the price-earnings ratio and of 1.48 for the price-book ratio.

Regal Beloit tops 64.2% of 1,841 competitors operating in the industrial products industry in terms of better price-earnings ratio and 50.71% of 2,384 competitors in terms of better price-book ratio.

Wall Street established an average target price of $87.14 per share, reflecting 6.6% upside within 52 weeks. Analysts recommend holding shares of Regal Beloit.

Over the past year through Nov. 29, the share price has increased 17% to above the 200-, 100- and 50-day simple moving average lines.

The 52-week range is $66.04 to $87.31. The dividend yield is 1.42% versus the industry median of 2% as of Nov. 29. The company is currently paying a cash quarterly dividend of 30 cents per common share. Regal Beloit has been paying dividends for 35 years.

The 14-day relative strength index of 59 suggests the stock is neither overbought nor oversold.

Allegheny Technologies

The second company is Allegheny Technologies Inc. (NYSE:ATI).

Shares of the Pittsburgh-based manufacturer of specialty metal materials and components closed at $23.06 on Friday for a market capitalization of $2.91 billion.

The stock has a Graham blended multiplier of 17.76, as the price-earnings ratio is 13.25 and the price-book ratio is 1.34. The industrial products industry has a median of 17.55 for the price-earnings ratio and of 1.48 for the price-book ratio.

Allegheny’s price-earnings ratio is ranked higher than 65.67% of 1,841 peers operating in the industrial products industry and its price-book ratio is ranked higher than 54.61% of 2,384 competitors.

Wall Street issued an average target price of $26.90 for shares of Allegheny Technologies. The recommendation rating is overweight.

Over the past year through Nov. 29, the share price has fallen 14%, but it is still above the 200-, 100- and 50-day simple moving average lines.

The 52-week range is $17.03 to $29.50. The company paid its last dividend on Sept. 8, 2016.

The 14-day relative strength index of 56 suggests the stock is neither overbought nor oversold.

CBTX

The third company is CBTX Inc. (NASDAQ:CBTX).

Shares of the Houston-based regional bank closed at $29.52 on Friday for a market capitalization of $742.7 million.

The stock has a Graham blended multiplier of 19.96, as the price-earnings ratio is 14.26 versus the industry median of 11.76, and the price-book ratio is 1.4 versus the industry median of 1.04.

CBTX beats 403 out of 1,325 competitors operating in the banks - regional industry in terms of better price-earnings ratio and 309 out of 1,411 competitors in terms of better price-book ratio.

Wall Street set an average target price of $30.67 for shares of CBTX, which reflects a 4% upside from Friday’s closing price. The recommendation rating is to hold the stock.

Over the past year through Nov. 29, the share price has fallen 14%, but it is still above the 200-, 100- and 50-day simple moving average lines.

The 52-week range is $25.92 to $34.83. The dividend yield is 1.19% versus the industry median of 3% as of Nov. 29. Currently, the company pays a quarterly dividend of 10 cents per common share.

The 14-day relative strength index of 53 indicates the stock is neither overbought nor oversold.

Disclosure: I have no positions in any securities mentioned.

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About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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