Here we offer an interesting look at undervalued opportunities – stocks gaining on high trading volume while still undervalued relative to the Graham equation's fair price.

Benjamin Graham, the man who developed the equation for the Graham number, was a former mentor of Warren Buffett and is the so-called “Godfather” of value investing.

The Graham Number, or the maximum price an investor should pay for a stock, is derived using only two data points: current earnings per share and current book value per share.

The Graham Number = Fair Value of a Stock = Square Root of (22.5) x (TTM Earnings per Share) x (MRQ Book Value per Share).

The math of the Graham number is relatively straightforward. 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.

We ultimately found 6 high-volume gainers that met all of these requirements to appear undervalued.

Do you think these stocks should be trading higher? Use this list as a starting-off point for your own analysis.

List sorted by potential upside implied by the graham equation. (Note: For each stock we'll list the relative volume indicator, which expresses today's trading volume as a multiple of the three month average)

* 1. Alpha & Omega Semiconductor, Ltd. (NASDAQ:AOSL):* Semiconductor Industry. Market cap of $300.78M. The stock gained 1.03% on 5/23/11, with relative volume at 2.58. BVPS at $10.20, diluted EPS at $1.54. Graham number = sqrt(22.5 x $10.20 x $1.54) = $18.80. Current price at $13.75 (implies a potential upside of 36.73%). The stock has lost 7.92% over the last year.

* 2. Northrop Grumman Corporation (NYSE:NOC):* Conglomerates Industry. Market cap of $18.88B. The stock gained 0.99% on 5/23/11, with relative volume at 1.89. BVPS at $43.33, diluted EPS at $7.08. Graham number = sqrt(22.5 x $43.33 x $7.08) = $83.08. Current price at $65.14 (implies a potential upside of 27.54%). The stock offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 3.1%, current ratio at 1.47, and quick ratio at 1.33. The stock has gained 19.98% over the last year.

* 3. AmTrust Financial Services, Inc. (NASDAQ:AFSI): *Property & Casualty Insurance Industry. Market cap of $1.26B. The stock gained 0.24% on 5/23/11, with relative volume at 1.93. BVPS at $12.87, diluted EPS at $2.46. Graham number = sqrt(22.5 x $12.87 x $2.46) = $26.69. Current price at $21.11 (implies a potential upside of 26.43%). The stock is a short squeeze candidate, with a short float at 10.72% (equivalent to 17.02 days of average volume). The stock has had a good month, gaining 15.14%.

* 4. The Goldman Sachs Group, Inc. (NYSE:GS): *Diversified Investments Industry. Market cap of $69.89B. The stock gained 0.63% on 5/23/11, with relative volume at 1.51. BVPS at $133.94, diluted EPS at $9.13. Graham number = sqrt(22.5 x $133.94 x $9.13) = $165.88. Current price at $135.84 (implies a potential upside of 22.11%). The stock has performed poorly over the last month, losing 11.6%.

* 5. SeaCube Container Leasing Ltd. (NYSE:BOX-OLD): *Rental & Leasing Services Industry. Market cap of $350.18M. The stock gained 2.19% on 5/23/11, with relative volume at 3.54. BVPS at $9.89, diluted EPS at $1.74. Graham number = sqrt(22.5 x $9.89 x $1.74) = $19.68. Current price at $17.75 (implies a potential upside of 10.86%). The stock has had a couple of great days, gaining 7.96% over the last week.

* 6. Viewpoint Financial Group (VPFG): *Diversified Investments Industry. Market cap of $434.45M. The stock gained 0.64% on 5/23/11, with relative volume at 8.7. BVPS at $12.35, diluted EPS at $0.69. Graham number = sqrt(22.5 x $12.35 x $0.69) = $13.85. Current price at $12.55 (implies a potential upside of 10.33%). The stock has lost 20.01% over the last year.

**BVPS and diluted EPS sourced from Yahoo! Finance, all other data sourced from Finviz.*

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