Looking to gain on earnings season? While you can never be too sure of how the reports will turn out, there are some encouraging signs to suggest certain companies will report better earnings than others – perhaps even beating expectations.
In our search for companies that might meet this description we ran a screen for stocks meeting all of the following requirements
- Market cap above $300 million – larger companies offer more reliability
- Dividend yield above 1%, capped at 7% – a sustainable dividend yield that boasts confidence in the firm’s performance and ability to reward investors.
- Rallying above its 20, 50, and 200 day moving averages (MA) – these stocks are on a tear! Their stock price is rising rapidly. Their momentum may continue, and represent investor confidence in upcoming earning reports
Lastly, these names are undervalued by the Graham Number. This is a calculated through a popular formula invented by famed value investor Benjamin Graham, mentor to Warren Buffett. Any stock that is priced below the Graham Number, as indicated by the formula, is considered to be trading below fair value.
The Graham Number = Square Root of (22.5) x (TTM EPS) x (Most recent quarter Book Value per Share).
So what do you think? Are these rallying dividend stocks trading below fair value? Use this list as a starting point for your own analysis.
Use the Turbo Chart to Compare the Performance of the First Two Companies in the List to the S&P 500:
1. Main Street Capital Corporation (MAIN, Earnings, Analysts, Financials): A business development company specializing in equity, equity related, and debt investments in small and lower middle market companies. Market cap at $468.12M, most recent closing price at $25.02. Dividend yield at 6.97%. The stock is currently trading 1.32% above its 20-day MA, 4.79% above its 50-day MA, and 14.14% above its 200-day MA. Earnings date 08/02/12. Diluted TTM earnings per share at 3.09, and a MRQ book value per share value at 15.73, implies a Graham Number fair value = sqrt(22.5*3.09*15.73) = $33.07. Based on the stock’s price at $25.02, this implies a potential upside of 32.17% from current levels.
2. Piedmont Office Realty Trust Inc. (PDM, Earnings, Analysts, Financials): Engages in the acquisition and ownership of commercial real estate properties in the United States. Market cap at $2.95B, most recent closing price at $17.07. Dividend yield at 4.68%. The stock is currently trading 0.33% above its 20-day MA, 2.04% above its 50-day MA, and 1.38% above its 200-day MA. Earnings date 08/01/12. Diluted TTM earnings per share at 1.32, and a MRQ book value per share value at 16.08, implies a Graham Number fair value = sqrt(22.5*1.32*16.08) = $21.85. Based on the stock’s price at $17.07, this implies a potential upside of 28.02% from current levels.
3. CenterPoint Energy, Inc. (CNP, Earnings, Analysts, Financials): Operates as a public utility holding company in the United States. Market cap at $9.05B, most recent closing price at $21.19. Dividend yield at 3.82%. The stock is currently trading 2.13% above its 20-day MA, 3.74% above its 50-day MA, and 8.74% above its 200-day MA. Earnings date 08/02/12. Diluted TTM earnings per share at 3.16, and a MRQ book value per share value at 10.03, implies a Graham Number fair value = sqrt(22.5*3.16*10.03) = $26.70. Based on the stock’s price at $21.19, this implies a potential upside of 26.02% from current levels.
4. Tower Group Inc. (TWGP, Earnings, Analysts, Financials): Provides a range of commercial, personal, and specialty property and casualty insurance products and services to businesses in various industries and to individuals in the United States. Market cap at $841.65M, most recent closing price at $21.34. Dividend yield at 3.45%. The stock is currently trading 2.55% above its 20-day MA, 6.57% above its 50-day MA, and 2.49% above its 200-day MA. Earnings date 08/01/12. Diluted TTM earnings per share at 1.37, and a MRQ book value per share value at 26.83, implies a Graham Number fair value = sqrt(22.5*1.37*26.83) = $28.76. Based on the stock’s price at $21.34, this implies a potential upside of 34.76% from current levels.
5. Huntsman Corporation (HUN, Earnings, Analysts, Financials): Engages in the manufacture and sale of differentiated organic and inorganic chemical products worldwide. Market cap at $2.99B, most recent closing price at $12.49. Dividend yield at 3.19%. The stock is currently trading 2.08% above its 20-day MA, 0.35% above its 50-day MA, and 1.74% above its 200-day MA. Earnings date 08/01/12. Diluted TTM earnings per share at 1.45, and a MRQ book value per share value at 8.01, implies a Graham Number fair value = sqrt(22.5*1.45*8.01) = $16.17. Based on the stock’s price at $12.49, this implies a potential upside of 29.43% from current levels.
6. IdaCorp, Inc. (IDA, Earnings, Analysts, Financials): Engages in the generation, transmission, distribution, sale, and purchase of electric energy in the United States. Market cap at $2.14B, most recent closing price at $42.74. Dividend yield at 3.08%. The stock is currently trading 0.46% above its 20-day MA, 4.47% above its 50-day MA, and 6.15% above its 200-day MA. Earnings date 08/02/12. Diluted TTM earnings per share at 3.26, and a MRQ book value per share value at 33.35, implies a Graham Number fair value = sqrt(22.5*3.26*33.35) = $49.46. Based on the stock’s price at $42.74, this implies a potential upside of 15.72% from current levels.
7. Marathon Petroleum Corporation (MPC, Earnings, Analysts, Financials): Engages in refining, transporting, and marketing petroleum products primarily in the United States and internationally. Market cap at $16.03B, most recent closing price at $47.04. Dividend yield at 2.95%. The stock is currently trading 5.25% above its 20-day MA, 15.82% above its 50-day MA, and 22.59% above its 200-day MA. Earnings date 07/31/12. Diluted TTM earnings per share at 6.89, and a MRQ book value per share value at 27.11, implies a Graham Number fair value = sqrt(22.5*6.89*27.11) = $64.83. Based on the stock’s price at $47.04, this implies a potential upside of 37.82% from current levels.
8. The Allstate Corporation (ALL, Earnings, Analysts, Financials): Engages in the personal property and casualty insurance, life insurance, retirement, and investment products businesses primarily in the United States. Market cap at $17.06B, most recent closing price at $34.73. Dividend yield at 2.53%. The stock is currently trading 1.19% above its 20-day MA, 2.34% above its 50-day MA, and 14.15% above its 200-day MA. Earnings date 07/31/12. Diluted TTM earnings per share at 2.01, and a MRQ book value per share value at 38.91, implies a Graham Number fair value = sqrt(22.5*2.01*38.91) = $41.95. Based on the stock’s price at $34.73, this implies a potential upside of 20.79% from current levels.
9. Murphy Oil Corporation (MUR, Earnings, Analysts, Financials): Engages in the exploration and production of oil and gas properties worldwide. Market cap at $10.54B, most recent closing price at $54.30. Dividend yield at 2.02%. The stock is currently trading 7.08% above its 20-day MA, 13.78% above its 50-day MA, and 1.41% above its 200-day MA. Earnings date 08/01/12. Diluted TTM earnings per share at 4.6, and a MRQ book value per share value at 46.97, implies a Graham Number fair value = sqrt(22.5*4.6*46.97) = $69.72. Based on the stock’s price at $54.3, this implies a potential upside of 28.4% from current levels.
Written by Rebecca Lipman. EPS and BVPS data sourced from Yahoo! Finance, all other data sourced from Finviz.
Use Kapitall’s Tools: Looking for ways to analyze this list?
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Analyze These Ideas: Getting Started
Dig Deeper: Access Company Snapshots, Charts, Filings
- Main Street Capital Corporation (MAIN, Chart, Download SEC Filings)
- Piedmont Office Realty Trust Inc. (PDM, Chart, Download SEC Filings)
- CenterPoint Energy, Inc. (CNP, Chart, Download SEC Filings)
- Tower Group Inc. (TWGP, Chart, Download SEC Filings)
- Huntsman Corporation (HUN, Chart, Download SEC Filings)
- IdaCorp, Inc. (IDA, Chart, Download SEC Filings)
- Marathon Petroleum Corporation (MPC, Chart, Download SEC Filings)
- The Allstate Corporation (ALL, Chart, Download SEC Filings)
- Murphy Oil Corporation (MUR, Chart, Download SEC Filings)
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The Graham number covers only 2 of the Graham criteria for defensive investment. What about the other 5?