9 Best Stocks for Value Investors this Week

I evaluated 34 different companies this week to determine whether they are suitable for Defensive Investors, those unwilling to do substantial research, or Enterprising Investors, those who are willing to do such research. We also put each company through the ModernGraham valuation modelbased on Benjamin Graham’s value investing formulas in order to determine an intrinsic value for each. Out of those 34 companies, only nine were found to be undervalued or fairly valued and suitable for either Defensive or Enterprising Investors.

The following companies were found to be suitable for either the Defensive Investor or Enterprising Investor and undervalued:

#1 Cintas Corporation

Cintas Corporation (NASDAQ:CTAS) is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio and high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $ 2.07 in 2013 to an estimated $ 4.36 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.06% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Graham’s formula, returns an estimate of intrinsic value above the price.

#2 Citigroup

Citigroup Inc. (NYSE:C) is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last 10 years and the poor dividend history. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be undervalued after growing its EPSmg from $ -2.31 in 2012 to an estimated $ 4.1 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.16% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Graham’s formula, returns an estimate of intrinsic value above the price.

#3 Jabil Circuit

Jabil Circuit Inc. (NYSE:JBL) is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last 10 years. The Enterprising Investor is only concerned with the low current ratio. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be undervalued after growing its EPSmg from 53 cents in 2012 to an estimated $ 1.58 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.19% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Graham’s formula, returns an estimate of intrinsic value above the price.

#4 PulteGroup

PulteGroup Inc. (NYSE:PHM) is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last 10 years and the poor dividend history. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be undervalued after growing its EPSmg from $ -1.46 in 2012 to an estimated $ 2.06 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.7% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Graham’s formula, returns an estimate of intrinsic value above the price.

#5 Urban Outfitters

Urban Outfitters Inc. (NASDAQ:URBN) qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the poor dividend history. The Enterprising Investor is only concerned with the lack of dividends. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be fairly valued after growing its EPSmg from $ 1.43 in 2013 to an estimated $ 1.77 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 4.01% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

The good

The following companies were found to be suitable for the Defensive Investor or Enterprising Investor and fairly valued:

#6 AbbVie

AbbVie Inc. (NYSE:ABBV) is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last 10 years and the poor dividend history and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be fairly valued after growing its EPSmg from $ 2.23 in 2012 to an estimated $ 3.17 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 5.76% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

#7 Eaton

Eaton Corp. (NYSE:ETN) PLC Ordinary Shares qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be fairly valued after growing its EPSmg from $ 3.12 in 2012 to an estimated $ 4 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 3.69% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

#8 M&T Bank

M&T Bank Corp. (NYSE:MTB) qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be fairly valued after growing its EPSmg from $ 6.06 in 2012 to an estimated $ 7.54 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 3.34% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

#9 Oracle

Oracle Corporation (NYSE:ORCL) is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history and the high PB ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be fairly valued after growing its EPSmg from $ 1.84 in 2013 to an estimated $ 2.35 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 4.64% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

Disclosure: The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours. See my current holdings here. This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions. ModernGraham is not affiliated with the company in any manner. Please be sure to review our detailed disclaimer.