If you are a value investor looking to increase your exposure to the increasingly coveted healthcare sector, then this list may provide you with an interesting starting point for your own analysis.

To construct this list we looked for stocks with these characteristics:

- Market cap above $300M
- With substantial exposure to the healthcare sector
- And significantly undervalued to its Graham number

The Graham Number was considered to be the maximum price an investor should pay for a stock, according to the formula developed by Benjamin Graham.

It is calculated as follows:

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

This equation is predicated on Graham’s 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 included companies that meet both of these criteria. As a result, 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.

*Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research. *

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Considering these data points, which of these stocks would you rate as the best value candidate in this list?

* 1. Kindred Healthcare Inc. (NYSE:KND): *Medical Instruments & Supplies Industry. Market cap of $908.86M. BVPS at $26.41, diluted EPS at $1.6. Graham number = sqrt(22.5 x $26.41 x $1.6) = $30.83. Given the current price at $22.27, this implies an upside of 38.46%. The stock is a short squeeze candidate, with a short float at 17.25% (equivalent to 7.53 days of average volume). The stock has gained 52.68% over the last year.

* 2. WellPoint Inc. (WLP): *Health Care Plans Industry. Market cap of $28.03B. BVPS at $65.04, diluted EPS at $7.36. Graham number = sqrt(22.5 x $65.04 x $7.36) = $103.78. Given the current price at $76.66, this implies an upside of 35.38%. The stock has gained 46.02% over the last year.

* 3. Coventry Health Care Inc. (CVH): *Health Care Plans Industry. Market cap of $5.04B. BVPS at $28.81, diluted EPS at $3.05. Graham number = sqrt(22.5 x $28.81 x $3.05) = $44.46. Given the current price at $34.48, this implies an upside of 28.96%. The stock has gained 68.92% over the last year.

* 4. Lifepoint Hospitals Inc. (NASDAQ:LPNT): *Hospitals Industry. Market cap of $2.06B. BVPS at $37.42, diluted EPS at $3.01. Graham number = sqrt(22.5 x $37.42 x $3.01) = $50.34. Given the current price at $39.2, this implies an upside of 28.42%. The stock is a short squeeze candidate, with a short float at 8.08% (equivalent to 8.5 days of average volume). The stock has gained 14.32% over the last year.

* 5. Healthways Inc. (NASDAQ:HWAY): *Specialized Health Services Industry. Market cap of $514.15M. BVPS at $12.8, diluted EPS at $1.21. Graham number = sqrt(22.5 x $12.8 x $1.21) = $18.67. Given the current price at $15.08, this implies an upside of 23.79%. After a solid performance over the last year, HWAY has pulled back during recent sessions. The stock has gained 12.99% over the last year.

* 6. Sanofi-Aventis (NYSE:SNY):* Drug Manufacturers Industry. Market cap of $3.22B. BVPS at $29.19, diluted EPS at $2.73. Graham number = sqrt(22.5 x $29.19 x $2.73) = $42.34. Given the current price at $37.64, this implies an upside of 12.5%. The stock has gained 29.26% over the last year.

*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.