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Do you prefer looking for stocks that may be trading below their fair value? If so, you may identify with the term 'value investor.'

We ran a screen with this idea in mind, beginning with stocks of the financial sector that have been outperforming the market, with performance over the last quarter above 20%.

We then screened for those names that, despite outperforming, still appear undervalued relative to the Graham Number. The Graham Number is a measure of maximum fair value created by the "godfather of value investing" Benjamin Graham.

It is based off of a stock's EPS and book value per share (BVPS).

Graham Number = SQRT(22.5 x TTM EPS x MRQ BVPS)

The equation assumes that P/E should not be higher than 15 and P/BV should not be higher than 1.5. Stocks trading well below their Graham Number may be undervalued.

Interactive Chart: Press Play to compare changes in market cap 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 continue to outperform? Use this list as a starting point for your own analysis.

List sorted by potential upside implied by the Graham Number.

1. Newcastle Investment Corp. (NYSE:NCT): Operates as a real estate investment and finance company that invests in and manages a portfolio consisting primarily of real estate securities. Market cap at $431.04M, most recent closing price at $7.0.Performance over the last quarter at 37.35%. Diluted TTM earnings per share at 3.09, and a MRQ book value per share value at 1.24, implies a Graham Number fair value = sqrt(22.5*3.09*1.24) = $9.28. Based on the stock's price at $6.71, this implies a potential upside of 38.38% from current levels.

2. Fidelity Southern Corporation (NASDAQ:LION): Operates as a bank holding company for Fidelity Bank that provides financial products and services primarily in Georgia. Market cap at $114.81M, most recent closing price at $8.36. Performance over the last quarter at 28.86%. Diluted TTM earnings per share at 0.59, and a MRQ book value per share value at 9.07, implies a Graham Number fair value = sqrt(22.5*0.59*9.07) = $10.97. Based on the stock's price at $7.93, this implies a potential upside of 38.37% from current levels.

3. Preferred Bank (NASDAQ:PFBC): Operates as a commercial bank in California. Market cap at $156.96M, most recent closing price at $12.40. Performance over the last quarter at 56.37%. Diluted TTM earnings per share at 0.93, and a MRQ book value per share value at 12.15, implies a Graham Number fair value = sqrt(22.5*0.93*12.15) = $15.94. Based on the stock's price at $11.86, this implies a potential upside of 34.44% from current levels.

4. Bar Harbor Bankshares (NYSEMKT:BHB): Operates as the holding company for Bar Harbor Bank & Trust that provides various banking products and services to individuals, businesses, not-for-profit organizations, and municipalities primarily in Hancock, Washington, and Knox counties. Market cap at $143.33M, most recent closing price at $37.0. Performance over the last quarter at 22.77%. Diluted TTM earnings per share at 2.85, and a MRQ book value per share value at 30.49, implies a Graham Number fair value = sqrt(22.5*2.85*30.49) = $44.22. Based on the stock's price at $35.6, this implies a potential upside of 24.21% from current levels.

5. Main Street Capital Corporation (NYSE:MAIN): A business development company specializing in equity, equity related, and debt investments in small and lower middle market companies. Market cap at $721.96M, most recent closing price at $26.39. Performance over the last quarter at 24.09%. Diluted TTM earnings per share at 2.76, and a MRQ book value per share value at 15.19, implies a Graham Number fair value = sqrt(22.5*2.76*15.19) = $30.71. Based on the stock's price at $24.87, this implies a potential upside of 23.49% from current levels.

6. Discover Financial Services (NYSE:DFS): Operates as a credit card issuer and electronic payment services company primarily in the United States. Market cap at $17.79B, most recent closing price at $33.59. Performance over the last quarter at 22.54%. Diluted TTM earnings per share at 4.4, and a MRQ book value per share value at 16.66, implies a Graham Number fair value = sqrt(22.5*4.4*16.66) = $40.61. Based on the stock's price at $32.93, this implies a potential upside of 23.33% from current levels.

7. Peapack-Gladstone Financial Corp. (NASDAQ:PGC): Operates as the holding company for Peapack-Gladstone Bank that provides financial, trust, and investment services to individuals and small businesses in New Jersey. Market cap at $137.4M, most recent closing price at $15.57. Performance over the last quarter at 36.60%. Diluted TTM earnings per share at 1.25, and a MRQ book value per share value at 12.34, implies a Graham Number fair value = sqrt(22.5*1.25*12.34) = $18.63. Based on the stock's price at $15.17, this implies a potential upside of 22.81% from current levels.

8. Access National Corp. (NASDAQ:ANCX): Operates as the bank holding company for Access National Bank that provides commercial credit, deposit, and mortgage services to middle market businesses and associated professionals primarily in the greater Washington, D. Market cap at $126.85M, most recent closing price at $12.60. Performance over the last quarter at 35.82%. Diluted TTM earnings per share at 1.1, and a MRQ book value per share value at 8.13, implies a Graham Number fair value = sqrt(22.5*1.1*8.13) = $14.19. Based on the stock's price at $11.56, this implies a potential upside of 22.71% from current levels.

9. MidWest One Financial Group, Inc. (NASDAQ:MOFG): Operates as the holding company for MidWestOne Bank that provides various banking product and services. Market cap at $174.91M, most recent closing price at $20.62. Performance over the last quarter at 27.71%. Diluted TTM earnings per share at 1.47, and a MRQ book value per share value at 18.35, implies a Graham Number fair value = sqrt(22.5*1.47*18.35) = $24.64. Based on the stock's price at $20.08, this implies a potential upside of 22.69% from current levels.

10. Fortegra Financial Corporation (NYSE:FRF): Provides distribution and administration services, and insurance-related products to insurance companies, insurance brokers and agents, and other financial services companies in the United States. Market cap at $166.47M, most recent closing price at $8.29. Performance over the last quarter at 21.75%. Diluted TTM earnings per share at 0.68, and a MRQ book value per share value at 6.57, implies a Graham Number fair value = sqrt(22.5*0.68*6.57) = $10.03. Based on the stock's price at $8.29, this implies a potential upside of 20.94% from current levels.

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

Source: 10 Outperforming Financials Undervalued By The Graham Number