A Trio of Stocks With a Graham Blended Multiplier Below 22.5

GuruFocus.com
·3 min read

You can improve the effectiveness of your search for value stocks dramatically if you look for reasonably priced securities.

To do this, Benjamin Graham, the father of value investing, recommended a shortcut: multiply the price-earnings ratio of the stock by its price-book ratio to have what is known as the "Graham blended multiplier," the result of which indicates you should invest if it is below 22.5. Any ideal results may be an indication that the stock is trading cheaply compared to its intrinsic value, which serves as a benchmark.


Thus, the following securities draw the interest of value investors, as their Graham blended multiplier stands below 22.5.

Marathon Oil

The first company that meets these criteria is Marathon Oil Corp. (NYSE:MRO).

Shares of the Houston-based oil and gas exploration and production company closed at $10.64 on Feb. 14 for a market capitalization of $8.47 billion.

The stock has a Graham blended multiplier of 12.44, as the price-earnings ratio is 18.03 and the price-book ratio is 0.69. The industry has a median of 10.82 for the price-earnings ratio and a median of 0.9 for the price-book ratio.

Over the past year through Feb. 14, the stock has fallen 38% to below the 200-, 100- and 50-day simple moving average lines.

The 52-week range is $10.59 to $18.93. The forward dividend yield is 1.88%.

Wall Street issued an overweight recommendation rating for shares of Marathon Oil and has set an average target price of $16.18 per share.

Kelly Services

The second company that meets the screening criteria is Kelly Services Inc. (NASDAQ:KELYA).

Shares of the Troy, Michigan-based provider of workforce solutions to several businesses worldwide closed at $20.19 on Feb. 14 for a market capitalization of $778.87 million.

The stock has a Graham blended multiplier of 7.1, as the price-earnings ratio is 11.28 and the price-book ratio is 0.63. The industry has a median of 17.09 for the price-earnings ratio and of 1.8 for the price-book ratio.

Over the past year through Feb. 14, the stock declined 20% to below the 200-, 100- and 50-day simple moving average lines.

The 52-week range is $16.97 to $28.91. The forward dividend yield is 1.49%.

Wall Street issued an overweight recommendation rating for the stock and set an average target price of $29.

ArcBest

The third company that displays the screening criteria is ArcBest Corp. (NASDAQ:ARCB).

Shares of the Fort Smith, Arkansas-based provider of freight transportation services and integrated logistics solutions closed at $24.44 on Feb. 14 for a market capitalization of $620.93 million.

The stock has a Graham blended multiplier of 13.2, as the price-earnings ratio is 16.29 and the price-book ratio is 0.81. The industry has a median of 14.36 for the price-earnings ratio and of 1.12 for the price-book ratio.

Over the past year through Feb. 14, the share price has fallen 37% to below the 200-, 100- and 50-day simple moving average lines.

The 52-week range is $21.8 to $40.21. The forward dividend yield is 1.31%.

Wall Street issued a hold recommendation rating for shares of ArcBest and set an average target price of $30.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.