A Trio of Large-Cap Stocks Trading Below the Graham Number

- From Alberto Abaterusso

One way to discover opportunities for value creation is to look for stocks that trade below the Graham number, as those stocks may be selling at a discount to their intrinsic value.
The Graham number is calculated as the square root of "earnings per share x book value per share x 22.5".
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Bank of America Corp.
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BAC 15 year financial data
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Peter Lynch diagram from BAC

The first stock to make the cut is Bank of America Corp (NYSE: BAC), a US banking major.
The stock was trading at $ 29.96 per share as of Thursday's close, which is below the Graham number of $ 30.43, with a price-to-Graham number ratio of 0.98.
The stock price is down 15.23% over the past year, giving a market cap of $ 295.18 billion and a 52-week range of $ 17.95 to $ 35.67.
A trio of large-cap stocks that trade below the Graham number
GuruFocus gave the company a rating of 3 out of 10 for its financial strength and 4 out of 10 for profitability.
On Wall Street, the stock has an average recommendation rating of overweight with an average price target of $ 30.71 per share.
The company's top fund owner is Warren Buffett with 11.68% of the issued shares, followed by VANGUARD GROUP INC with 7.09% and BlackRock Inc. with 5.89%.
Toyota Motor Corp.
The second stock to make the cut is Toyota Motor Corp (NYSE: TM), a Japanese automaker.
The stock was trading at $ 150.47 per share at the close of trading on Thursday, which is below the Graham number of $ 167.89, which is a price to Graham number ratio of nearly 0.90.
The share price is up 6.5% over the past year, with a market cap of $ 210.35 billion and a 52-week range of $ 108.01 to $ 156.30.
A trio of large-cap stocks that trade below the Graham number
GuruFocus gave the company a rating of 5 out of 10 for its financial strength and 6 out of 10 for its profitability.
On Wall Street, the stock has an average recommendation rating of overweight with an average price target of $ 157.21 per share.
The company's top fund owner is Ken Fisher with 0.29% of the issued shares, followed by NORTHERN TRUST CORP with 0.10% and Jim Simons with 0.07%.
Citigroup Inc.
The third company to make the cut is Citigroup Inc (NYSE: C), a US major bank.
The stock was trading at $ 60.57 per share at close of trading on Thursday, which is below the Graham number of $ 90.94, with a price to Graham number ratio of 0.67.
The share price is down nearly 24% over the past year, with market capitalization around $ 126.10 billion. The stock price moved from $ 32 to $ 83.11 in a 52 week range.
A trio of large-cap stocks that trade below the Graham number
GuruFocus has given the company's financial strength a rating of 3 out of 10 and a rating of 4 out of 10 for its profitability.
On Wall Street, the stock has a medium buy recommendation with an average price target of $ 69.40 per share.
The company's main fund owner is VANGUARD GROUP INC with 8.15% of the issued shares, followed by BlackRock Inc. with 7.58% and STATE STREET CORP with 4.28%.
Disclosure: I have no position in any security mentioned in this article.
Read more here:
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This article first appeared on GuruFocus.
In this article
BAC
-0.30%
BAC-PA
+ 0.04%
BAC-PB
+ 0.58%
BAC-PC
-0.04%
BAC-PE
+ 0.60%
BAC-PJC
0.00%
BAC-PK
+ 0.32%
BAC-PL
-0.13%
BAC-PM
+ 0.36%
BAC-PN
+ 0.33%
BAC-PO
+ 0.15%
BML-PG
+ 0.45%
BML-PH
+ 0.55%
BML-PJ
+ 0.06%
BML-PL
+ 0.28%

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