### I'd like to share a couple Price/Graham Number screens with you

Recs

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Hey fools!

Just ran a modified Price/Graham Number screen. I took data from the Google stock screener, sorted for the following: mkt cap>1B, 5 yr avg ROE>20%, and Div yield>2%. Then I just copied the info into excel and calculated price to graham numbers for them all, and sorted lowest to highest.

Those results can be found here:

https://docs.google.com/spreadsheet/ccc?key=0AiCyYoc2ERYzdDZucWdJekVVTm5seVBvUUtJMWJ0S1E&usp=sharing

Then I ran a very similar 2nd screen. The differences being: 1) I removed the >2% dividend requirement, and 2) I relaxed the 5 yr avg ROE to 15% from the original 20%. That 2nd screen can be found below:

https://docs.google.com/spreadsheet/ccc?key=0AiCyYoc2ERYzdGJ4SVJMcE5aV2JGRjBLU2xHX3g0bnc&usp=sharing

Here are some notable names by P/Graham, sorted low to high.

RDS.A - 0.62x

GLW – 0.65x

TOT – 0.68x

AFL – 0.73x

CVX – 0.80x

DFS – 0.87x

LXK – 0.88x

UNH – 0.89x

FLO - 0.90x

ABT – 0.91x

KSS – 0.93x

INTC – 0.94x

AZN – 0.98x

RTN – 0.99x

JOY – 1.01x

JOSB – 1.02x

CSCO – 1.07x

HRS – 1.09x

F – 1.12x

NSC - 1.19x

CSX – 1.19x

AAPL – 1.26x

And here are 6 of the highest notables:

NFLX 19.72x

LULU – 5.50x

CL – 4.94x

HSY – 4.72x

SAM 4.09x

PCLN – 3.96x

Hope you found the info worthwhile!

Let me know if you have questions or comments.

Thanks,

-John

## 7 Comments – Post Your Own

#1)On February 27, 2013 at 9:35 PM,JohnCLeven (40.90)wrote:Also, this info is only as accurate as the google stock screener.

And, obviously, screens are a starting point of real research and no substitute for actual due dilligence.

Lastly, I just used regular book value per share, per google finance, not tangible BV.

I'll probably check those cheap notables against tangible bv as well and comment tomorrow.

Thanks

Report this comment#2)On February 27, 2013 at 9:54 PM,JohnCLeven (40.90)wrote:And here i've asterisked those notables that have way different ratios when you use tangible book value instead. (Tangible price/graham in quotations) Data from gurufocus.com.

RDS.A - 0.62x (0.6x)

GLW – 0.65x (0.8x)

TOT – 0.68x (0.7x)

AFL – 0.73x (0.6x)

CVX – 0.80x (0.9x)

DFS – 0.87x (0.9x)

LXK – 0.88x

*UNH – 0.89x (neg)

*FLO - 0.90x(4.6x)

*ABT – 0.91x (3.6x)

KSS – 0.93x (1.0x)

INTC – 0.94x (1.2x)

*AZN – 0.98x (neg)

*RTN – 0.99x (neg)

*JOY – 1.01x (1.9x)

JOSB – 1.02x (1.3x)

CSCO – 1.07x (1.2x)

*HRS – 1.09x (neg)

F – 1.12x (1.0x)

NSC - 1.19x (1.2x)

CSX – 1.19x (1.3x)

AAPL – 1.26x (1.1x)

For what it's worth, I find KSS to be the most interesting.

Report this comment#3)On February 28, 2013 at 10:59 AM,EnigmaDude (51.58)wrote:If you like Kohls (KSS) you might have an opportunity to get some shares cheap after today's earnings report:

Report this commentKohl’s Corp., meanwhile, reported a smaller-than-expected profit decline but gave a disappointing outlook.#4)On February 28, 2013 at 3:45 PM,JohnCLeven (40.90)wrote:Thanks EnigmaDude!

I've considered buying KSS a few times in the past few weeks, but my COH keeps declining, and it's a positon I already have and have more confidence in. If I wasn't on a COH buying spree, there's a decent chance i'd be buying KSS.

Report this comment#5)On February 28, 2013 at 7:39 PM,NovaTodd (42.34)wrote:I've tried to incorporate the Graham Number concept into my analysis. I've changed the formula around a bit to use Tangible Book Value, as you did in your follow-up, and FCF/Share instead of EPS. It provides a nice reference point when trying to ascertain something like a fair value in a no growth scenario. I've also thought about using a five year FCF average instead of just TTM to smooth out the normal business cycle but it tends to skew the numbers in favor of no-growth companies with historically strong earnings (HPQ, for example), making them look deceptively cheap.

Happy to see a couple of my larger holdings (KSS, INTC) near the top of the list.

#6)On March 01, 2013 at 7:21 AM,JohnCLeven (40.90)wrote:Thanks for the good feedback Nova!

I really like your CAPs picks by the way. Very similar to my own picks. I'll have to go through the picks you've made that I haven't made, as i'm sure I'll find some gems among them.

Report this comment#7)On March 04, 2013 at 7:16 PM,NovaTodd (42.34)wrote:Thanks, John. I read your pitch for Kohl's some time back and figured we would have quite a bit of overlap. I hope you keep up with the blogging; I enjoy reading your posts.

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