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5 Undervalued Stocks Near Lows for Enterprising Value Investors – Aug 2016

Enterprising Undervalued 52 Week Lows

There are a number of great undervalued stocks in the stock market today. By using the ModernGraham Valuation Model, I’ve selected five undervalued stocks for Enterprising Investors  trading closest to their 52 week low. Each of these companies has been determined to be suitable for potential investing in the stock market by the Enterprising Investor according to the ModernGraham approach.

Defensive Investors are defined as investors who are not able or willing to do substantial research into individual investments in the stock market, 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 to find the best companies to invest in 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 – Aug 2016 while also conducting further research into the following companies.

Gilead Sciences, Inc. (GILD)

Gilead Sciences, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.61 in 2012 to an estimated $8.69 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.72% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Gilead Sciences, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.  (See the full valuation)

chart (13)

LyondellBasell Industries NV (LYB)

LyondellBasell Industries NV is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, the poor dividend history, and the high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $-944.17 in 2012 to an estimated $8.48 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.4% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

LyondellBasell Industries NV performs fairly well in the ModernGraham grading system, scoring a B.  (See the full valuation)

chart (12)

AMETEK, Inc. (AME)

Ametek Inc qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio as well as the high PEmg and PB ratios. The Enterprising Investor is only initially concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.21 in 2011 to an estimated $2.24 for 2015. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.85% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Ametek Inc performs fairly well in the ModernGraham grading system, scoring a B-.  (See the full valuation)

chart (11)

Phillips 66 (PSX)

Phillips 66 is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.40 in 2012 to an estimated $6.75 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.38% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Phillips 66 performs fairly well in the ModernGraham grading system, scoring a B.  (See the full valuation)

chart (10)

Hanesbrands Inc. (HBI)

Hanesbrands Inc qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the short dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only initially concerned by the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $0.46 in 2011 to an estimated $0.93 for 2015. This level of demonstrated earnings growth supports the market’s implied estimate of 12.07% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

Hanesbrands Inc receives an average rating in the ModernGraham grading system, scoring a C+.  (See the full valuation)

chart (9)

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 did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

2 thoughts on “5 Undervalued Stocks Near Lows for Enterprising Value Investors – Aug 2016

  1. What does the + or – number, AME (+70%), after a stock mean?

    How does your subscription cancellation policy if I subscribe annually and I decide to cancel my subscription after the 4 th, 5th or 10th month?

    1. Tom – The number in the chart is the % gain or loss during the time period in the chart. I typically try to display 5-year charts for informational purposes, though there have been some technical difficulties with embedding the GuruFocus charts lately and that hasn’t ended up being the time period that displays. So AME is up 70% in the 5-year period in that chart.

      If you get an annual subscription and request a refund in the middle of the subscription period, I will pro-rate the refund.

      Ben

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