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Looking to diminish your portfolio’s risk exposure to the overall market and increase your value-holdings? Then this list might offer a good starting point.

To construct this list we looked for stocks with low beta profile and trading at a significant discount to their Graham Number.



As you may already know, The Graham Number is the maximum price Benjamin Graham thought an investor should pay for a stock. It is derived as follows:

The Graham Number = Square Root of (22.5) x (Earnings per Share) x (Book Value per Share).

It is predicated on the belief that the price-to-earnings (P/EPS) ratio should be no more than 15, and the price-to-book value (P/BVPS) ratio should be no more than 1.5. Therefore we only include companies that meet both of these criteria.

From these criteria, the product of the two should not be more than 22.5. In other words, (P/EPS of 15) x (P/BVPS of 1.5) = 22.5, from which the equation was created.

What do you think? Which of these stocks do you find more likely to provide you uncorrelated and attractive returns?

1. KT Corp. (NYSE:KT): Telecom Services Industry. Market cap of $10.60B. Beta at 0.89. BVPS at 21.23, diluted EPS at 2.25. Graham number = sqrt(22.5 x 21.23 x 2.25) = $32.78. Given the current price at $20.29, the stock is trading at a discount of 38.11%. The stock has lost 10.26% over the last year.

2. Triple-S Management Corporation (NYSE:GTS): Accident & Health Insurance Industry. Market cap of $594.71M. Beta at 0.89. BVPS at 21.43, diluted EPS at 2.28. Graham number = sqrt(22.5 x 21.43 x 2.28) = $33.16. Given the current price at $20.58, the stock is trading at a discount of 37.93%. The stock has gained 14.43% over the last year.



3. Fidelity National Financial, Inc. (NYSE:FNF): Surety & Title Insurance Industry. Market cap of $3.43B. Beta at 0.55. BVPS at 15.64, diluted EPS at 1.74. Graham number = sqrt(22.5 x 15.64 x 1.74) = $24.74. Given the current price at $15.38, the stock is trading at a discount of 37.85%. Relatively low correlation to the market (beta = 0.55), which may be appealing to risk averse investors. The stock has gained 4.78% over the last year.



4. Meadowbrook Insurance Group Inc. (NYSE:MIG): Property & Casualty Insurance Industry. Market cap of $545.28M. Beta at 0.8. BVPS at 10.28, diluted EPS at 1.1. Graham number = sqrt(22.5 x 10.28 x 1.1) = $15.95. Given the current price at $10.12, the stock is trading at a discount of 36.56%. Might be undervalued at current levels, with a PEG ratio at 0.93, and P/FCF ratio at 3.33. The stock has gained 32.47% over the last year.



5. Renasant Corp. (NASDAQ:RNST): Regional Bank. Market cap of $399.21M. Beta at 0.92. BVPS at 18.89, diluted EPS at 1.49. Graham number = sqrt(22.5 x 18.89 x 1.49) = $25.17. Given the current price at $15.98, the stock is trading at a discount of 36.5%. The stock is a short squeeze candidate, with a short float at 6.06% (equivalent to 28.26 days of average volume). The stock has gained 0.76% over the last year.

6. Xcel Energy Inc. (NYSE:XEL): Electric Utilities Industry. Market cap of $11.81B. Beta at 0.43. BVPS at 18.89, diluted EPS at 3.35. Graham number = sqrt(22.5 x 18.89 x 3.35) = $37.73. Given the current price at $24.43, the stock is trading at a discount of 35.26%. The stock has gained 15.42% over the last year.

7. Infinity Property and Casualty Corp. (NASDAQ:IPCC): Property & Casualty Insurance Industry. Market cap of $725.40M. Beta at 0.45. BVPS at 53.03, diluted EPS at 6.95. Graham number = sqrt(22.5 x 53.03 x 6.95) = $91.06. Given the current price at $58.96, the stock is trading at a discount of 35.25%. The stock has gained 25.73% over the last year.

8. SCBT Financial Corp. (SCBT): Regional Bank. Market cap of $439.04M. Beta at 0.8. BVPS at 26.1, diluted EPS at 4.08. Graham number = sqrt(22.5 x 26.1 x 4.08) = $48.95. Given the current price at $31.71, the stock is trading at a discount of 35.22%. The stock has lost 21.67% over the last year.

9. Capstead Mortgage Corp. (NYSE:CMO): Mortgage Investment Industry. Market cap of $926.42M. Beta at 0.45. BVPS at 12.07, diluted EPS at 1.52. Graham number = sqrt(22.5 x 12.07 x 1.52) = $20.32. Given the current price at $13.25, the stock is trading at a discount of 34.78%. The stock has gained 30.4% over the last year.

10. Amedisys Inc. (NASDAQ:AMED): Home Health Care Industry. Market cap of $1.0B. Beta at 0.56. BVPS at 30.64, diluted EPS at 3.95. Graham number = sqrt(22.5 x 30.64 x 3.95) = $52.18. Given the current price at $34.11, the stock is trading at a discount of 34.63%. Might be undervalued at current levels, with a PEG ratio at 0.79, and P/FCF ratio at 8.57. The stock is a short squeeze candidate, with a short float at 20.83% (equivalent to 14.64 days of average volume). The stock has lost 41.38% over the last year.

11. NRG Energy, Inc. (NYSE:NRG): Electric Utilities Industry. Market cap of $5.96B. Beta at 0.81. BVPS at 32.58, diluted EPS at 1.84. Graham number = sqrt(22.5 x 32.58 x 1.84) = $36.73. Given the current price at $24.22, the stock is trading at a discount of 34.05%. Exhibiting strong upside momentum--currently trading 8.85% above its SMA20, 14.79% above its SMA50, and 16.65% above its SMA200. The stock has had a couple of great days, gaining 6.82% over the last week.

12. Seacor Holdings Inc. (NYSE:CKH): Shipping Industry. Market cap of $2.14B. Beta at 0.77. BVPS at 83.56, diluted EPS at 11.74. Graham number = sqrt(22.5 x 83.56 x 11.74) = $148.57. Given the current price at $99.01, the stock is trading at a discount of 33.36%. The stock has gained 34.72% over the last year.

13. ProAssurance Corporation (NYSE:PRA): Property & Casualty Insurance Industry. Market cap of $2.05B. Beta at 0.41. BVPS at 60.35, diluted EPS at 7.2. Graham number = sqrt(22.5 x 60.35 x 7.2) = $98.88. Given the current price at $66.75, the stock is trading at a discount of 32.49%. Might be undervalued at current levels, with a PEG ratio at 0.89, and P/FCF ratio at 14.73. The stock has had a couple of great days, gaining 5.25% over the last week.

14. Prospect Capital Corporation (NASDAQ:PSEC): Asset Management Industry. Market cap of $1.05B. Beta at 0.73. BVPS at 10.25, diluted EPS at 1.36. Graham number = sqrt(22.5 x 10.25 x 1.36) = $17.71. Given the current price at $11.99, the stock is trading at a discount of 32.3%. The stock is a short squeeze candidate, with a short float at 9.42% (equivalent to 5.51 days of average volume). The stock has gained 12.22% over the last year.

15. Nash Finch Co. (NASDAQ:NAFC): Food Wholesale Industry. Market cap of $442.98M. Beta at 0.58. BVPS at 31.68, diluted EPS at 3.85. Graham number = sqrt(22.5 x 31.68 x 3.85) = $52.39. Given the current price at $36.57, the stock is trading at a discount of 30.19%. The stock is a short squeeze candidate, with a short float at 6.68% (equivalent to 13.79 days of average volume). The stock has gained 0.38% over the last year.

16. Main Street Capital Corporation (NYSE:MAIN): Diversified Investments Industry. Market cap of $344.64M. Beta at 0.79. BVPS at 13.06, diluted EPS at 2.38. Graham number = sqrt(22.5 x 13.06 x 2.38) = $26.45. Given the current price at $18.53, the stock is trading at a discount of 29.93%. The stock has gained 24.38% over the last year.

17. Education Management Corporation (NASDAQ:EDMC): Education & Training Services Industry. Market cap of $1.33B. Beta at 0.61. BVPS at 15.78, diluted EPS at 1.78. Graham number = sqrt(22.5 x 15.78 x 1.78) = $25.14. Given the current price at $17.9, the stock is trading at a discount of 28.8%. Might be undervalued at current levels, with a PEG ratio at 0.66, and P/FCF ratio at 6.46. The stock is also a short squeeze candidate, with a short float at 6.82% (equivalent to 23.6 days of average volume).

18. Axis Capital Holdings Ltd. (NYSE:AXS): Property & Casualty Insurance Industry. Market cap of $4.09B. Beta at 0.77. BVPS at 41.17, diluted EPS at 2.51. Graham number = sqrt(22.5 x 41.17 x 2.51) = $48.22. Given the current price at $34.51, the stock is trading at a discount of 28.43%. The stock has gained 13.83% over the last year.

19. Washington Trust Bancorp Inc. (NASDAQ:WASH): Regional Bank. Market cap of $366.77M. Beta at 0.81. BVPS at 17.29, diluted EPS at 2.58. Graham number = sqrt(22.5 x 17.29 x 2.58) = $31.68. Given the current price at $22.72, the stock is trading at a discount of 28.29%. The stock has gained 24.74% over the last year.

20. The Chubb Corporation (NYSE:CB):
Property & Casualty Insurance Industry. Market cap of $19.15B. Beta at 0.48. BVPS at 52.24, diluted EPS at 6.76. Graham number = sqrt(22.5 x 52.24 x 6.76) = $89.14. Given the current price at $64.9, the stock is trading at a discount of 27.19%.

21. OneBeacon Insurance Group, Ltd. (NYSE:OB): Surety & Title Insurance Industry. Market cap of $1.34B. Beta at 0.87. BVPS at 13.02, diluted EPS at 1.25. Graham number = sqrt(22.5 x 13.02 x 1.25) = $19.14. Given the current price at $13.95, the stock is trading at a discount of 27.1%. The stock has gained 9.95% over the last year.

22. Etablissements Delhaize Freres et Cie Le Lion S.A. (NYSE:DEG)
: Grocery Stores Industry. Market cap of $8.78B. Beta at 0.71. BVPS at 74.63, diluted EPS at 8.4. Graham number = sqrt(22.5 x 74.63 x 8.4) = $118.76. Given the current price at $86.64, the stock is trading at a discount of 27.05%. The stock has gained 6.92% over the last year.

23. Eni SpA (NYSE:E): Major Integrated Oil & Gas Industry. Market cap of $106.44B. Beta at 0.92. BVPS at 42.3, diluted EPS at 5.42. Graham number = sqrt(22.5 x 42.3 x 5.42) = $71.82. Given the current price at $52.91, the stock is trading at a discount of 26.33%. The stock has gained 27.64% over the last year.

24. HCC Insurance Holdings Inc. (NYSE:HCC): Property & Casualty Insurance Industry. Market cap of $3.73B. Beta at 0.69. BVPS at 29, diluted EPS at 2.99. Graham number = sqrt(22.5 x 29 x 2.99) = $44.17. Given the current price at $32.56, the stock is trading at a discount of 26.28%. The stock has gained 22.93% over the last year.

25. Baldwin & Lyons Inc. (NASDAQ:BWINB): Property & Casualty Insurance Industry. Market cap of $335.60M. Beta at 0.73. BVPS at 24.9, diluted EPS at 1.69. Graham number = sqrt(22.5 x 24.9 x 1.69) = $30.77. Given the current price at $22.73, the stock is trading at a discount of 26.13%. The stock has lost 8.6% over the last year.

26. France Telecom (FTE): Telecom Services - Foreign Industry. Market cap of $62.20B. Beta at 0.78. BVPS at 16.27, diluted EPS at 2.7. Graham number = sqrt(22.5 x 16.27 x 2.7) = $31.44. Given the current price at $23.39, the stock is trading at a discount of 25.6%. The stock has gained 19.25% over the last year.

27. Edison International (NYSE:EIX): Electric Utilities Industry. Market cap of $12.79B. Beta at 0.71. BVPS at 32.48, diluted EPS at 3.82. Graham number = sqrt(22.5 x 32.48 x 3.82) = $52.84. Given the current price at $39.62, the stock is trading at a discount of 25.01%. The stock has gained 17.27% over the last year.

28. EarthLink Inc. (NASDAQ:ELNK): Internet Service Providers Industry. Market cap of $898.30M. Beta at 0.91. BVPS at 6.99, diluted EPS at 0.74. Graham number = sqrt(22.5 x 6.99 x 0.74) = $10.79. Given the current price at $8.14, the stock is trading at a discount of 24.55%. The stock has lost 3.6% over the last year.

29. Companhia Paranaense de Energia (NYSE:ELP): Electric Utilities Industry. Market cap of $7.55B. Beta at 0.85. BVPS at 25.67, diluted EPS at 2.3. Graham number = sqrt(22.5 x 25.67 x 2.3) = $36.45. Given the current price at $27.51, the stock is trading at a discount of 24.52%. The stock has gained 34.52% over the last year.

30. Selective Insurance Group Inc. (NASDAQ:SIGI): Property & Casualty Insurance Industry. Market cap of $950.21M. Beta at 0.92. BVPS at 19.95, diluted EPS at 1.2. Graham number = sqrt(22.5 x 19.95 x 1.2) = $23.21. Given the current price at $17.58, the stock is trading at a discount of 24.25%. The stock has gained 7.19% over the last year.

*Relevant data sourced from Yahoo! Finance and Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Top 30 Most Undervalued Low Beta Stocks, According to the Graham Number