Feature Screens

5 Undervalued Companies for the Enterprising Investor Near 52 Week Lows – June 2014

5def-ent-lows_edited-1There are a number of great companies in the market today. By using the ModernGraham Valuation Model, I’ve selected the five undervalued companies reviewed by ModernGraham trading closest to their 52 week low. Each of these companies has been determined to be suitable for the Enterprising Investor according to the ModernGraham approach. This is a sample of one screen that is included in ModernGraham Stocks & Screens.  Defensive Investors are defined as investors who are not able or willing to do substantial research into individual investments, and therefore need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to do substantial research and can select companies that present a moderate (though still low) amount of risk. Defensive Investors may also be interested in reviewing 5 Undervalued Companies for the Defensive Investor Near 52 Week Lows – June 2014 while also conducting further research into the following companies.

This month, Family Dollar Stores (FDO), International Paper Co. (IP), and Waters Company (WAT) all were removed from the list and replaced with CA, Inc. (CA), Ralph Lauren (RL), and People’s United Financial (PBCT).  Be sure to also check out the history of this screen!

Bed Bath & Beyond Inc. (BBBY)

500px-Bedbath&beyond.svgBed Bath & Beyond is a great company for Defensive Investors and Enterprising Investors to consider.  The only concern for either investor type is the lack of dividend payments.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research into the company and comparing it to other opportunities.  From a valuation perspective, the company appears to be significantly undervalued after growing its EPSmg (normalized earnings) from $2.38 in 2010 to an estimated $4.60 for 2014.  This demonstrated level of growth surpasses the market’s implied estimate of 2.51% earnings growth and leads the ModernGraham valuation model to return an estimate of intrinsic value that is well above the price.  (See the full valuation)
BBBY Chart

BBBY data by YCharts

Coach, Inc. (COH)

Official_Coach_Inc_LogoCoach Inc. is a very intriguing company for Enterprising Investors, having passed all five of the investor type’s requirements.  The company does not quite qualify for the Defensive Investor due to the short dividend history and the high PB ratio.  As a result, Enterprising Investors should feel very comfortable proceeding with further research into the company but should also compare it to other opportunities through a review of 5 Low PEmg Companies for the Defensive Investor and 5 Low PEmg Companies for the Enterprising Investor.  From a valuation perspective, the company looks significantly undervalued after having grown its EPSmg (normalized earnings) from $2.03 in 2010 to an estimated $3.19 for 2014.  This demonstrated level of growth outpaces the market’s implied estimate of 2.15% earnings growth, and leads the ModernGraham valuation model to return an estimate of intrinsic value that is well above the market price. (See the full valuation)

COH Chart

COH data by YCharts

CA, Inc. (CA)

500px-CA_Technologies_brand.svgCA Inc. qualifies for Defensive Investors and thus also qualifies for Enterprising Investors.  The Defensive Investor’s only concern is the low current ratio, and even though the Enterprising Investor has concerns with the level of debt relative to the current assets, the Enterprising Investor is satisfied because the company is suitable for Defensive Investors.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and its competitors by exploring the ModernGraham Valuation Index.  From a valuation perspective, the company appears to be undervalued, after growing its EPSmg (normalized earnings) from $1.06 in 2010 to $1.91 for 2014.  This demonstrated level of growth is greater than the market’s implied estimate of 3.36% earnings growth and leads the ModernGraham valuation model to return an estimate of intrinsic value that is above the market price at this time. (See the full valuation)
CA Chart

CA data by YCharts

Ralph Lauren (RL)

Ralph_Lauren_CorporationRalph Lauren is suitable for Enterprising Investors, having passed all of the investor type’s requirements, but the company is not suitable for Defensive Investors.  The Defensive Investor is concerned with the high price-to-earnings and price-to-book ratios.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities through a review of ModernGraham’s valuation of VF Corp (VFC) and ModernGraham’s valuation of Coach Inc. (COH).  As for a valuation, the company appears significantly undervalued after growing its EPSmg (normalized earnings) from $4.13 in 2010 to $7.45 for 2014.  This high level of demonstrated growth outpaces the market’s implied estimate of 6.17% and leads the ModernGraham valuation model, which is based on a Benjamin Graham formula, to return an estimate of intrinsic value well above the market price. (See the full valuation)
RL Chart

RL data by YCharts

People’s United Financial (PBCT)

PeoplesUnitedBankPeople’s United Financial is suitable for Enterprising Investors but not for Defensive Investors.  The Defensive Investor is concerned with the high PEmg ratio, but the company passes all of the requirements for the Enterprising Investor.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing the company to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from a $0.34 in 2010 to an estimated $0.71 for 2014.  This level of demonstrated growth surpasses the market’s implied estimate of 6.26% earnings growth and leads the ModernGraham valuation model to return an estimate of intrinsic value that is well above the price at this time. (See the full valuation)
PBCT Chart

PBCT data by YCharts

What do you think?  Are these companies a good value for Enterprising Investors?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author held a long position in Coach Inc. (COH) but did not hold a position in any other company mentioned in this article at the time of publication and had no intention of changing those holdings within the next 72 hours.

 

 

 

 

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