16 Rallying Dividend Stocks Undervalued By Graham

One method of searching for potentially undervalued stocks is using an equation created by none other than the “godfather of value investing,” Benjamin Graham. Graham was a former mentor to Warren Buffett, whom he taught at Columbia Business School. The equation calculates what is known as the “Graham number,” which is the maximum fair value for a stock. Any stock trading at a significant discount to this number is considered undervalued by the equation. The Graham Number only requires two data points: current earnings per share and current book value per share. 
The Graham Number = Square Root of (22.5) x (TTM Earnings per Share) x (MRQ Book Value per Share). 

This equation assumes that a stock is overvalued if P/E is over 15 or P/BV is over 1.5. We used this equation to screen for potentially undervalued stocks among the universe of dividend stocks rallying above their 20-day, 50-day,... Read more