4 Stocks With Low Graham Numbers
0.12%April 24 | MyPlanIQ portfolio symbol P_36789

Will Consumer Confidence Drive Up Certain Stocks

We are shifting gears away from dividend stocks to consider Alexander Crawford's contention that
Consumer Confidence rising may benefit certain stocks. According to the Bloomberg Consumer Comfort Index, which ranges from -100 to 100, consumers are more “comfortable” than they’ve been in a year. The index rose to -39.8 from -41.7 in the middle of February. This news came out just as the Labor Department released news reduced first time unemployment claims.

To find the companies that might benefit from this, he  ran a screen on the 30 stocks of the Dow Jones Industrial Average for those that appear undervalued relative to the
Graham Number.

Graham Number = SQRT(22.5 x EPS x  BookValuePS)


The contention is that stocks trading well below their Graham Number may be undervalued. Here are the ones with the biggest upside:

  • Alcoa, Inc. (AA): Graham Number fair value = sqrt(22.5*0.55*12.96) = $12.66. Based on the stock’s price at $10.35, this implies a potential upside of 22% from current levels
  • Chevron Corp. (CVX): Graham Number fair value = sqrt(22.5*13.44*60.7) = $135.48. Based on the stock’s price at $109.91, this implies a potential upside of 23% from current levels.
  • Hewlett-Packard Company (HPQ): Graham Number fair value = sqrt(22.5*3.32*19.41) = $38.08. Based on the stock’s price at $26.29, this implies a potential upside of 44% from current levels.
  • The Travelers Companies, Inc. (TRV): Graham Number fair value = sqrt(22.5*3.37*62.31) = $68.74. Based on the stock’s price at $58.66, this implies a potential upside of 17% from current levels

Any company in the Dow 30 are big players that are not going to disappear overnight. The only one about which I have concern is HPQ but this is a list that is worthy of comparison with our dividend bearing ETF benchmark.


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From 01/19/2005 to 04/24/2024, the worst annualized return of 3-year rolling returns is -8.54%.

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