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5 Undervalued Stocks For The Modern Day Investor

Published 08/02/2017, 03:13 PM
Updated 07/09/2023, 06:31 AM


Today’s market is flooded with great companies to invest in. The following companies fulfill the set parameters to be considered as undervalued. We arrived at this conclusion using the Modern Graham Valuation Model. Every company on this list has been deemed fitting for the cyclical investor to invest as per the Modern Graham technique.

Non-cyclical Investors are defined as investors who will make investment decisions without conducting enough research into investments. They will invest in ventures that show signs of the least amount of risk. Cyclical Investors are defined as investors who conduct thorough research into an investment. This research allows them to choose companies that offer a small amount of risk. If a company is fitting to the Non-cyclical Investor, it is also acceptable for Cyclical Investors.

Navient Corp (NASDAQ:NAVI)

This corporation is suitable for the Cyclical Investor. The Non-cyclical Investor will be focused on the deficient earnings the company posted for the decade. The shrinking return history also caught his attention. The Cyclical Investor has no initial concerns. This makes him feel comfortable, and he proceeds with the research.

The corporation is undervalued after posting growth in its earnings which rose from 63 cents in 2012 to an astonishing $2.39 for 2016. This level of growth is ahead of the expected rate of 1.25% annual loss over the next decade. As a result, the ModernGraham model, shows estimates of inherent value above the price. During the assessment period, research into the company showed that it was trading below its Graham Number of $21.98. The company pays out dividends of 64 cents per share for a yield of 4.5%. This makes it one of the best dividend-paying stocks in the current market.

Gilead Sciences Inc (NASDAQ:GILD).

Gilead Sciences is not an acceptable choice for the Non-cyclical Investor because he will be put off by the faint current ratio, poor dividend history, and the inflated price-book (P/B) ratio. The only thing that the Cyclical Investor will concern himself with is the size of debt relative to the value of current assets. These factors seem positive for the Cyclical Investor, and he should feel contented to continue with analysis. The company appears to satisfy characteristics of an undervalued company. This is because of its growing EPSmg that went from $1.61 in 2012 to $8.69 in 2016. The valuation model the returns at an estimate of natural value above the price.

Michael Kors Holdings (NYSE:KORS)

Kors Holdings is suitable choice for the Cyclical Investor. The Non-cyclical Investor will only notice the inadequate earnings stability over the last decade, the poor return payment history, and the inflated P/B ratio. The Cyclical Investor will focus on the lack of bonuses. Because of this, all Cyclical Investors should be okay with continuing with the analysis. As for valuation, the company appears to exhibit signs of being undervalued after posting improved EPSmg rates from 96 cents in 2013 to $4.07 for 2017. This kind of earnings growth is considered to be greater than the market’s estimate of annual earnings of 1.92% for the next five to nine years

Linamar Corporation (TO:LNR)

Linamar is an acceptable choice for the Cyclical Investor. This is because reason behind this is the Non-cyclical Investor will only concentrate on the moderate current ratio and inadequate earnings posted over the last decade. The Cyclical Investor will choose to focus on the level of debt relative to the net value of current assets. From this approach all Cyclical Investors should be satisfied with progressing with their analysis. The company appears to be undervalued after posting positive figures in its EPSmg which rose from $2.22 in 2013 to $6.93 for 2017. The level of earnings growth demonstrated is better than the market's implied estimate. The valuation model returns an estimate of intrinsic value above the price.

LyondellBasell Industries NV (NYSE:LYB)

LyondellBasell is suitable for the Cyclical Investor. The Non-cyclical Investor is only focused on the insufficient earnings growth posted for the past 10 years and the poor return on investment history. The Cyclical Investor will notice the level of debt versus the net value of current assets. As a result, all Cyclical Investors should feel content proceeding with their analysis.

The company shows signs of being undervalued after posting favorable EPSmg from $-939.34 in 2012 to $7.50 in 2016. This level of growth in earnings demonstrated supersedes the market's estimate of 0.5% growth in annual earnings over the next five to eight years. As a result, the valuation model shows estimates of congenital value above the expected price

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