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Value investors search for stocks that appear underpriced relative to their intrinsic value, which is based off of company metrics such as earnings or book value. One helpful way to find undervalued opportunities is from the “godfather of value investing” himself, Benjamin Graham.

Graham created an equation to calculate the maximum fair value for a stock, referred to as the Graham Number. Any stock trading at a significant discount to this number would appear undervalued.

The Graham Number only requires two data points: current earnings per share and current book value per share. 
The Graham Number = Square Root of (22.5) x (TTM Earnings per Share) x (MRQ Book Value per Share).

We screened stocks in the S&P 500 that are technically oversold, with RSI(14) below 40, for those that appear undervalued relative to the Graham number.

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.



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 Graham number.

1. Molson Coors Brewing Company (NYSE:TAP): Distributes beer brands. Market cap of $7.61B. RSI(14) at 35.11. TTM Diluted EPS at $3.58, MRQ Book Value Per Share at $43.50, Graham number at $59.19 (vs. current price at $42.58, implies a potential upside of 39.02%). The stock has lost 9.25% over the last year.

2. Cliffs Natural Resources Inc. (NYSE:CLF):
Produces iron ore pellets, lump and fines iron ore, and metallurgical coal products. Market cap of $8.99B. RSI(14) at 28.10. TTM Diluted EPS at $11.03, MRQ Book Value Per Share at $37.99, Graham number at $97.10 (vs. current price at $70.75, implies a potential upside of 37.24%). This is a risky stock that is significantly more volatile than the overall market (beta = 2.37). It's been a rough couple of days for the stock, losing 21.68% over the last week.

3. SunTrust Banks, Inc. (NYSE:STI):
Operates as the holding company for SunTrust Bank, which provides various financial services to consumer and corporate customers in the United States. Market cap of $9.45B. RSI(14) at 36.76. TTM Diluted EPS at $0.81, MRQ Book Value Per Share at $36.40, Graham number at $25.76 (vs. current price at $19.20, implies a potential upside of 34.15%). It's been a rough couple of days for the stock, losing 10.11% over the last week.

4. AFLAC Inc. (NYSE:AFL): Provides supplemental health and life insurance. Market cap of $15.51B. RSI(14) at 36.75. TTM Diluted EPS at $3.80, MRQ Book Value Per Share at $25.65, Graham number at $46.83 (vs. current price at $35.21, implies a potential upside of 33.0%). Might be undervalued at current levels, with a PEG ratio at 0.72, and P/FCF ratio at 1.99. The stock is currently stuck in a downtrend, trading 6.71% below its SMA20, 15.5% below its SMA50, and 32.61% below its SMA200. It's been a rough couple of days for the stock, losing 5.01% over the last week.

5. Boston Scientific Corporation (NYSE:BSX):
Develops, manufactures, and markets medical devices used in various interventional medical specialties worldwide. Market cap of $9.08B. RSI(14) at 37.02. TTM Diluted EPS at $0.40, MRQ Book Value Per Share at $7.55, Graham number at $8.24 (vs. current price at $6.26, implies a potential upside of 31.68%). It's been a rough couple of days for the stock, losing 8.2% over the last week.

6. Valero Energy Corp. (NYSE:VLO): Operates as an independent petroleum refining and marketing company. Market cap of $11.38B. RSI(14) at 35.03. TTM Diluted EPS at $1.21, MRQ Book Value Per Share at $28.00, Graham number at $27.61 (vs. current price at $21.07, implies a potential upside of 31.04%). It's been a rough couple of days for the stock, losing 9.43% over the last week.

7. General Dynamics Corp. (NYSE:GD): Provides business aviation, combat vehicles, weapons systems and munitions, military and commercial shipbuilding, and communications and information technology products and services worldwide. Market cap of $20.72B. RSI(14) at 34.71. TTM Diluted EPS at $7.01, MRQ Book Value Per Share at $38.49, Graham number at $77.92 (vs. current price at $59.59, implies a potential upside of 30.75%). The stock has lost 6.57% over the last year.

8. Forest Laboratories Inc. (NYSE:FRX):
Develops, manufactures, and sells branded and generic forms of ethical drug products. Market cap of $8.62B. RSI(14) at 30.87. TTM Diluted EPS at $4.12, MRQ Book Value Per Share at $19.25, Graham number at $42.24 (vs. current price at $32.47, implies a potential upside of 30.10%). The stock is a short squeeze candidate, with a short float at 9.29% (equivalent to 7.07 days of average volume). The stock has lost 0.66% over the last year.

9. Apache Corp. (NYSE:APA): Operates as an independent energy company. Market cap of $37.38B. RSI(14) at 32.04. TTM Diluted EPS at $9.95, MRQ Book Value Per Share at $66.28, Graham number at $121.81 (vs. current price at $94.85, implies a potential upside of 28.43%). The stock is currently stuck in a downtrend, trading 7.1% below its SMA20, 15.43% below its SMA50, and 22.67% below its SMA200. The stock has lost 3.78% over the last year.

10. The Washington Post Company (WPO):
Operates as a diversified education and media company in the United States and internationally. Market cap of $2.53B. RSI(14) at 33.42. TTM Diluted EPS at $24.07, MRQ Book Value Per Share at $341.53, Graham number at $430.07 (vs. current price at $335.29, implies a potential upside of 28.27%). The stock is a short squeeze candidate, with a short float at 8.4% (equivalent to 10.95 days of average volume). It's been a rough couple of days for the stock, losing 7.16% over the last week.

11. SAIC, Inc. (SAI):
Offers scientific, engineering, systems integration, and technical services to various branches of the U.S. military and U.S. government. Market cap of $4.27B. RSI(14) at 29.77. TTM Diluted EPS at $1.69, MRQ Book Value Per Share at $7.09, Graham number at $16.42 (vs. current price at $12.94, implies a potential upside of 26.89%). The stock is currently stuck in a downtrend, trading 7.22% below its SMA20, 14.36% below its SMA50, and 22.36% below its SMA200. The stock has lost 21.39% over the last year.

12. Whirlpool Corp. (NYSE:WHR):
Engages in the manufacture and marketing of home appliances worldwide. Market cap of $3.82B. RSI(14) at 30.53. TTM Diluted EPS at $3.29, MRQ Book Value Per Share at $57.87, Graham number at $65.45 (vs. current price at $51.66, implies a potential upside of 26.70%). The stock is currently stuck in a downtrend, trading 11.41% below its SMA20, 20.12% below its SMA50, and 35.45% below its SMA200. It's been a rough couple of days for the stock, losing 7.58% over the last week.

13. Chevron Corp. (NYSE:CVX):
Engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. Market cap of $188.82B. RSI(14) at 39.85. TTM Diluted EPS at $11.45, MRQ Book Value Per Share at $57.74, Graham number at $121.96 (vs. current price at $98.29, implies a potential upside of 24.09%). Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 3.31%, current ratio at 1.53, and quick ratio at 1.33. The stock has gained 22.78% over the last year.

14. BlackRock, Inc. (NYSE:BLK):
Provides its services to institutional, intermediary, and individual investors. Market cap of $26.37B. RSI(14) at 37.72. TTM Diluted EPS at $12.27, MRQ Book Value Per Share at $136.38, Graham number at $194.04 (vs. current price at $157.48, implies a potential upside of 23.21%). The stock has lost 8.63% over the last year.

15. Staples, Inc. (NASDAQ:SPLS): Operates as an office products company. Market cap of $9.54B. RSI(14) at 39.88. TTM Diluted EPS at $1.30, MRQ Book Value Per Share at $10.02, Graham number at $17.12 (vs. current price at $14.17, implies a potential upside of 20.82%). Might be undervalued at current levels, with a PEG ratio at 0.73, and P/FCF ratio at 11.75. The stock is currently stuck in a downtrend, trading 6.07% below its SMA20, 7.75% below its SMA50, and 27.45% below its SMA200. It's been a rough couple of days for the stock, losing 7.88% over the last week.

16. Safeway Inc. (NYSE:SWY):
Operates as a food and drug retailer in North America. Market cap of $5.79B. RSI(14) at 34.63. TTM Diluted EPS at $1.44, MRQ Book Value Per Share at $13.32, Graham number at $20.77 (vs. current price at $17.20, implies a potential upside of 20.78%). The stock is a short squeeze candidate, with a short float at 9.47% (equivalent to 5.24 days of average volume). It's been a rough couple of days for the stock, losing 7.23% over the last week.

17. The Allstate Corporation (NYSE:ALL): Engages in the personal property and casualty insurance, life insurance, retirement, and investment products businesses primarily in the United States. Market cap of $11.93B. RSI(14) at 34.09. TTM Diluted EPS at $1.05, MRQ Book Value Per Share at $36.29, Graham number at $29.28 (vs. current price at $24.48, implies a potential upside of 19.61%). It's been a rough couple of days for the stock, losing 7.27% over the last week.

18. Avery Dennison Corporation (NYSE:AVY): Produces pressure-sensitive materials, office products, tickets, tags, labels, and other converted products. Market cap of $2.75B. RSI(14) at 38.73. TTM Diluted EPS at $2.78, MRQ Book Value Per Share at $17.05, Graham number at $32.66 (vs. current price at $27.47, implies a potential upside of 18.88%). The stock has lost 26.11% over the last year.

19. Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX): Engages in the exploration, mining, and production of mineral resources. Market cap of $33.74B. RSI(14) at 23.96. TTM Diluted EPS at $5.87, MRQ Book Value Per Share at $15.30, Graham number at $44.95 (vs. current price at $38.39, implies a potential upside of 17.09%). It's been a rough couple of days for the stock, losing 14.67% over the last week.

*BVPS and EPS data 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.

Source: 19 Oversold S&P 500 Stocks Undervalued By Graham