If you are a follower of Graham’s value investment philosophy, you may find this article to be a great starting point to find potential value stocks.

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

- Market cap above $300M

- Oversold conditions as described by the RSI(14), i.e. RSI(14) < 30

- Significantly undervalued by the Graham number

The Graham Number is 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.

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 names would you rate as the best value stock in this list?

Savings & Loans Industry. Market cap of $1.33B. RSI(14) at 29.02. BVPS at $13.62, diluted EPS at $0.93. Graham number = sqrt(22.5 x $13.62 x $0.93) = $16.88. Given the current price at $13.19, this implies an upside of 27.99%. The stock is a short squeeze candidate, with a short float at 9.6% (equivalent to 11.01 days of average volume). The stock has lost 4.65% over the last year.

1. Astoria Financial Corporation (AF):

*Diversified Electronics Industry. Market cap of $309.31M. RSI(14) at 26.71. BVPS at $8.2, diluted EPS at $0.65. Graham number = sqrt(22.5 x $8.2 x $0.65) = $10.95. Given the current price at $8.92, this implies an upside of 22.77%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.02). The stock has performed poorly over the last month, losing 17.03%.*

**2. CTS Corporation (CTS):***Movie Production, Theaters Industry. Market cap of $1.79B. RSI(14) at 26.36. BVPS at $15.01, diluted EPS at $1.83. Graham number = sqrt(22.5 x $15.01 x $1.83) = $24.86. Given the current price at $21.37, this implies an upside of 16.33%. The stock is a short squeeze candidate, with a short float at 10.% (equivalent to 6.26 days of average volume). The stock has performed poorly over the last month, losing 16.26%.*

**3. DreamWorks Animation SKG Inc. (DWA):***Regional Banks Industry. Market cap of $1.87B. RSI(14) at 26.51. BVPS at $171.46, diluted EPS at $14.29. Graham number = sqrt(22.5 x $171.46 x $14.29) = $234.79. Given the current price at $179.41, this implies an upside of 30.87%. The stock is currently stuck in a downtrend, trading -5.12% below its SMA20, -8.42% below its SMA50, and -6.52% below its SMA200. The stock has lost 11.68% over the last year.*

**4. First Citizens Bancshares Inc. (FCNCA):***Heavy Construction Industry. Market cap of $323.46M. RSI(14) at 27.7. BVPS at $4.78, diluted EPS at $0.47. Graham number = sqrt(22.5 x $4.78 x $0.47) = $7.11. Given the current price at $5.38, this implies an upside of 32.15%. The stock is a short squeeze candidate, with a short float at 5.45% (equivalent to 6.72 days of average volume). The stock has performed poorly over the last month, losing 14.46%.*

**5. Great Lakes Dredge & Dock Corporation (GLDD):***Semiconductor Industry. Market cap of $1.80B. RSI(14) at 26.6. BVPS at $18.87, diluted EPS at $2.18. Graham number = sqrt(22.5 x $18.87 x $2.18) = $30.42. Given the current price at $25.66, this implies an upside of 18.56%. The stock is currently stuck in a downtrend, trading -7.69% below its SMA20, -16.36% below its SMA50, and -9.76% below its SMA200. The stock has performed poorly over the last month, losing 17.4%.*

**6. International Rectifier Corporation (IRF):***Regional Banks Industry. Market cap of $310.88M. RSI(14) at 26.58. BVPS at $13.54, diluted EPS at $2.14. Graham number = sqrt(22.5 x $13.54 x $2.14) = $25.53. Given the current price at $18.83, this implies an upside of 35.6%. The stock is a short squeeze candidate, with a short float at 7.38% (equivalent to 28.48 days of average volume). The stock has lost 1.61% over the last year.*

**7. Southside Bancshares Inc. (SBSI):***Specialty Retail, Other Industry. Market cap of $10.88B. RSI(14) at 29.06. BVPS at $10.18, diluted EPS at $1.23. Graham number = sqrt(22.5 x $10.18 x $1.23) = $16.78. Given the current price at $15.1, this implies an upside of 11.16%. Might be undervalued at current levels, with a PEG ratio at 0.84, and P/FCF ratio at 14.The stock has performed poorly over the last month, losing 24.69%.*

8. Staples, Inc. (SPLS):8. Staples, Inc. (SPLS):

*Money Center Banks Industry. Market cap of $2.19B. RSI(14) at 28.71. BVPS at $10.89, diluted EPS at $0.99. Graham number = sqrt(22.5 x $10.89 x $0.99) = $15.57. Given the current price at $13.69, this implies an upside of 13.77%. The stock is a short squeeze candidate, with a short float at 8.84% (equivalent to 7.56 days of average volume). It's been a rough couple of days for the stock, losing 5.37% over the last week.*

9. TCF Financial Corporation (TCB):9. TCF Financial Corporation (TCB):

*Appliances Industry. Market cap of $5.67B. RSI(14) at 29.24. BVPS at $58.78, diluted EPS at $8.01. Graham number = sqrt(22.5 x $58.78 x $8.01) = $102.93. Given the current price at $73.9, this implies an upside of 39.28%. The stock is a short squeeze candidate, with a short float at 8.91% (equivalent to 5.15 days of average volume). The stock has performed poorly over the last month, losing 13.67%.*

**10. Whirlpool Corp. (WHR):***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.

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