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Value investors look for stocks trading below their fair value with the assumption that they'll soon rise to that value, generating a profit. If you identify with value investing, you may be interested in this list.

We ran a screen on small-cap stocks, with market caps between $300-$500 million, for those trading at significant discounts to their Graham number, a proxy for fair value.

The Graham Number is a measure of a stock's maximum fair value, and it 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). This equation assumes that a stock is overvalued if P/E is over 15 or P/BV is over 1.5. Stocks trading at a significant discount to their Graham number may be undervalued.

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 will soon rise to their Graham number? Use this list as a starting point for your own analysis.

List sorted by potential upside implied by Graham number.

1. SeaCube Container Leasing Ltd. (NYSE:BOX-OLD): Operates as a container leasing company worldwide. Market cap of $300.79M. TTM Diluted EPS at $1.88, MRQ Book Value Per Share at $10.29, Graham number at $20.86 (vs. current price at $14.92, implies a potential upside of 39.83%). The stock has had a couple of great days, gaining 11.93% over the last week.

2. Digital Generation, Inc. (NASDAQ:DGIT): Provides digital technology services that enable the electronic delivery of advertisements, syndicated programs, and video news releases to traditional broadcasters, online publishers, and other media outlets. Market cap of $437.57M. TTM Diluted EPS at $1.20, MRQ Book Value Per Share at $18.19, Graham number at $22.16 (vs. current price at $15.90, implies a potential upside of 39.38%). The stock is a short squeeze candidate, with a short float at 7.81% (equivalent to 5.19 days of average volume). It's been a rough couple of days for the stock, losing 6.31% over the last week.

3. Southside Bancshares Inc. (NASDAQ:SBSI): Operates as the holding company for Southside Bank that provides financial products and services to individuals, businesses, municipal entities, and non-profit organizations. Market cap of $341.26M. TTM Diluted EPS at $2.28, MRQ Book Value Per Share at $15.69, Graham number at $28.37 (vs. current price at $20.72, implies a potential upside of 36.92%). The stock is a short squeeze candidate, with a short float at 5.96% (equivalent to 15.54 days of average volume). The stock has gained 8.6% over the last year.

4. Alamo Group, Inc. (NYSE:ALG): Provides equipment and related replacement parts for maintenance and agriculture. Market cap of $316.93M. TTM Diluted EPS at $2.41, MRQ Book Value Per Share at $23.15, Graham number at $35.43 (vs. current price at $26.61, implies a potential upside of 33.15%). Exhibiting strong upside momentum - currently trading 9.89% above its SMA20, 18.45% above its SMA50, and 10.44% above its SMA200. The stock has had a couple of great days, gaining 10.55% over the last week.

5. Simmons First National Corporation (NASDAQ:SFNC): Provides a range of banking products and services to individual and corporate customers in Arkansas, Missouri, and Kansas. Market cap of $430.71M. TTM Diluted EPS at $2.06, MRQ Book Value Per Share at $23.52, Graham number at $33.02 (vs. current price at $24.94, implies a potential upside of 32.39%). The stock has lost 7.8% over the last year.

6. Greatbatch, Inc. (NYSE:GB): Provides technology solutions for medical and industrial applications. Market cap of $496.01M. TTM Diluted EPS at $1.74, MRQ Book Value Per Share at $19.84, Graham number at $27.87 (vs. current price at $21.17, implies a potential upside of 31.65%). The stock is a short squeeze candidate, with a short float at 7.93% (equivalent to 9.61 days of average volume). The stock has lost 4.85% over the last year.

7. Community Trust Bancorp Inc. (NASDAQ:CTBI): Operates as the holding company for Community Trust Bank, Inc. Market cap of $429.88M. TTM Diluted EPS at $2.49, MRQ Book Value Per Share at $23.58, Graham number at $36.35 (vs. current price at $27.86, implies a potential upside of 30.46%). The stock has gained 3.72% over the last year.

8. Getty Realty Corp. (NYSE:GTY): Operates as a real estate investment trust (REIT) in the United States. Market cap of $499.18M. TTM Diluted EPS at $1.37, MRQ Book Value Per Share at $11.98, Graham number at $19.22 (vs. current price at $14.95, implies a potential upside of 28.54%). The stock is a short squeeze candidate, with a short float at 7.26% (equivalent to 8.44 days of average volume). The stock has lost 44.07% over the last year.

9. Assisted Living Concepts Inc. (NYSE:ALC): Operates senior living residences in the United States. Market cap of $303.59M. TTM Diluted EPS at $0.97, MRQ Book Value Per Share at $13.04, Graham number at $16.87 (vs. current price at $13.24, implies a potential upside of 27.42%). It's been a rough couple of days for the stock, losing 5.09% over the last week.

10. Multi-Fineline Electronix Inc. (NASDAQ:MFLX): Engages in the engineering, design, and manufacture of flexible printed circuit boards and related component assemblies for the electronics industry. Market cap of $468.75M. TTM Diluted EPS at $1.56, MRQ Book Value Per Share at $17.27, Graham number at $24.62 (vs. current price at $19.45, implies a potential upside of 26.58%). The stock has lost 12.51% over the last year.

11. Nara Bancorp Inc. (NARA): Operates as the holding company for Nara Bank that provides commercial banking services primarily to small-to medium-sized businesses in California. Market cap of $337.55M. TTM Diluted EPS at $0.66, MRQ Book Value Per Share at $8.37, Graham number at $11.15 (vs. current price at $8.89, implies a potential upside of 25.41%). The stock is a short squeeze candidate, with a short float at 11.23% (equivalent to 12.82 days of average volume). The stock has had a good month, gaining 30.16%.

12. Rush Enterprises, Inc. (NASDAQ:RUSHB): Operates as an integrated retailer of commercial vehicles and related services in North America. Market cap of $365.72M. TTM Diluted EPS at $1.16, MRQ Book Value Per Share at $13.39, Graham number at $18.69 (vs. current price at $15.05, implies a potential upside of 24.21%). It's been a rough couple of days for the stock, losing 7.78% over the last week.

13. Viasystems Group Inc. (NASDAQ:VIAS): Provides multi-layer printed circuit boards (PCBs) and electro-mechanical solutions worldwide. Market cap of $303.61M. TTM Diluted EPS at $1.11, MRQ Book Value Per Share at $13.65, Graham number at $18.46 (vs. current price at $14.89, implies a potential upside of 24.0%). This is a risky stock that is significantly more volatile than the overall market (beta = 3.09). It's been a rough couple of days for the stock, losing 16.68% over the last week.

14. Shoe Carnival Inc. (NASDAQ:SCVL): Operates as a family footwear retailer. Market cap of $322.99M. TTM Diluted EPS at $1.96, MRQ Book Value Per Share at $20.18, Graham number at $29.83 (vs. current price at $24.34, implies a potential upside of 22.56%). The stock is currently stuck in a downtrend, trading 13.03% below its SMA20, 8.13% below its SMA50, and 15.44% below its SMA200. It's been a rough couple of days for the stock, losing 6.2% over the last week.

15. Stage Stores Inc. (NYSE:SSI): Operates as a specialty department store retailer that offers branded and private label apparel, accessories, cosmetics, and footwear for women, men, and children in the United States. Market cap of $430.56M. TTM Diluted EPS at $0.96, MRQ Book Value Per Share at $13.15, Graham number at $16.85 (vs. current price at $13.84, implies a potential upside of 21.77%). The stock is a short squeeze candidate, with a short float at 14.88% (equivalent to 11.25 days of average volume). The stock has gained 4.37% over the last year.

16. Prestige Brands Holdings, Inc. (NYSE:PBH): Engages in marketing, selling, and distributing over-the-counter healthcare and household cleaning products primarily in North America. Market cap of $471.02M. TTM Diluted EPS at $0.72, MRQ Book Value Per Share at $7.79, Graham number at $11.23 (vs. current price at $9.34, implies a potential upside of 20.28%). It's been a rough couple of days for the stock, losing 7.25% over the last week.

17. First Financial Corp. (NASDAQ:THFF): Provides various financial services. Market cap of $435.92M. TTM Diluted EPS at $2.70, MRQ Book Value Per Share at $26.06, Graham number at $39.79 (vs. current price at $33.15, implies a potential upside of 20.03%). The stock has gained 9.8% over the last year.

18. ECA Marcellus Trust I (NYSE:ECT): Holds royalty interests in producing and development horizontal natural gas wells for Energy Corporation of America (NYSE:ECA). Market cap of $434.61M. TTM Diluted EPS at $2.08, MRQ Book Value Per Share at $18.31, Graham number at $29.27 (vs. current price at $24.68, implies a potential upside of 18.61%). It's been a rough couple of days for the stock, losing 5.69% over the last week.

19. Washington Trust Bancorp Inc. (NASDAQ:WASH): Operates as the holding company for The Washington Trust Company that offers various financial products and services to individuals and businesses in the United States. Market cap of $373.53M. TTM Diluted EPS at $1.79, MRQ Book Value Per Share at $17.54, Graham number at $26.58 (vs. current price at $22.93, implies a potential upside of 15.91%). The stock has gained 15.28% over the last year.

20. Tompkins Financial Corporation. (NYSEMKT:TMP): Provides banking and financial services to individuals, corporations, and other business clients in New York. Market cap of $428.56M. TTM Diluted EPS at $3.17, MRQ Book Value Per Share at $27.81, Graham number at $44.54 (vs. current price at $38.54, implies a potential upside of 15.56%). The stock is a short squeeze candidate, with a short float at 7.7% (equivalent to 24.31 days of average volume). The stock has gained 2.5% over the last year.

*EPS and BVPS 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: 20 Small-Cap Stocks Undervalued By The Graham Number