Value Screeners Identify Opportunities for June

As investors prepare for the summer season, GuruFocus’ value screens have identified several stocks that meet investing criteria based on value legends like Benjamin Graham, Peter Lynch, Joel Greenblatt (Trades, Portfolio) and Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio).

One of the website’s major Premium features, GuruFocus’ value screens include the Benjamin Graham net-net screen, the Undervalued-Predictable Screener, the Buffett-Munger Screener, the Peter Lynch Screener, the Greenblatt Magic Formula Screener, and other value screeners involving historical low price-book ratios, historical low price-sales ratios or high dividend yields.

Benjamin Graham Net-Net Screen

Benjamin Graham wrote in his book, “The Intelligent Investor,” that the net-net investing strategy seeks to invest in the stocks trading below 66% of net current asset value. Graham defined net-net investment capital as the sum of cash and cash equivalents, 75% of accounts receivable and 50% of total inventory minus total liabilities.

Table 1 lists the number of Benjamin Graham Net-Net stocks for each GuruFocus subscription region as of Friday.

Table 1

One of the top Benjamin Graham Net-Net stocks for the U.S. region is Oncternal Therapeutics Inc. (ONCT, Financial). The stock trades around 34 cents per share, approximately 34.38% of its net current asset value of 89 cents per share and 36.87% of its net-net working capital of 83 cents per share.

Undervalued-Predictable Screener

The Undervalued-Predictable Screener looks for stocks that have high business predictability and are undervalued based on the discounted cash flow model.

By default, the GuruFocus DCF Calculator starts with a company’s trailing 12-month earnings per share and considers two stages of growth: a growth stage of 10 years at the 10-year earnings growth rate followed by a terminal stage of 10 years at the estimated long-term inflation rate of 4%.

As of Friday, the Top 25 Undervalued-Predictable Stocks model portfolio has returned a cumulative 427.06% since its inception in 2009. During the past 10 years, the portfolio gained an annualized 9.24% per year, compared to the Standard & Poor’s 500 Index return of an annualized 10.07% per year over the same period.

Table 2 lists the number of undervalued-predictable stocks for each GuruFocus subscription region.

Table 2

One of the top undervalued-predictable stocks for the U.S. region is BOK Financial Group (BOKF, Financial). Based on earnings of $9.22 per share and a 10-year growth rate of 7.1%, the bank has a margin of safety of 33.92% assuming the default DCF Calculator parameters.

Buffett-Munger Screener

The Buffett-Munger Screener lists the stocks that meet Buffett and Munger’s four-criteria approach to investing: understandable business, favorable growth prospects, shareholder-oriented management and attractive valuations. Key criteria include a high business predictability rank, increasing gross profit margins, low debt-to-asset growth rate and a price-earnings-to-growth ratio less than 2.

As of Friday, the Top 25 Buffett-Munger Companies model portfolio has returned a cumulative 439.16% since its inception in 2006. During the past 15 years, the model portfolio has returned an annualized 11.96% per year, outperforming the S&P 500 return of an annualized 7.97% per year.

Table 3 lists the number of Buffett-Munger stocks for each GuruFocus subscription region.

Table 3

One of the top Buffett-Munger stocks for the U.S. region is Toll Brothers Inc. (TOL, Financial). The stock’s profitability ranks 10 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank, a high Piotroski F-score of 8 out of 9 and an operating margin that has increased by approximately 3.7% per year on average over the past five years and is outperforming more than 70% of global competitors.

Peter Lynch Screener

The Peter Lynch Screener lists the stocks that trade below the Fidelity Magellan Fund manager’s earnings line, which Lynch set at 15 times earnings per share.

Table 4 lists the number of Peter Lynch stocks for each GuruFocus subscription region as of Friday.

Table 4

Greenblatt Magic Formula Screen

Gotham Asset Management leader Joel Greenblatt (Trades, Portfolio) wrote in his book, “The Little Book that Beats the Market,” a magic investing formula that involves the earnings yield and return on capital. Greenblatt defined earnings yield as the ratio of earnings before interest and taxes and enterprise value. Likewise, Greenblatt’s return on capital is the ratio of earnings before interest and taxes and the sum of net working capital and property, plant and equipment.

Based on Greenblatt’s magic formula, stocks with high earnings yield and return on capital have higher rank. Table 5 lists the number of magic formula stocks for each GuruFocus subscription region as of Friday.

Table 5

Historical Low Price-Book and Historical Low Price-Sales Screens

The Historical Low Price-Book and Historical Low Price-Sales Screeners allow users to view the stocks that have high business predictability and are trading at price-book or price-sales ratios near a 10-year low.

Table 6 lists the number of stocks making the Historical Low Price-Book and Historical Low Price-Sales screeners for each GuruFocus subscription region as of Friday.

Table 6

High Dividend Yield Screen

The High Dividend Yield Screener screens for stocks that have a dividend yield of at least 4%. Table 7 lists the number of high dividend yield stocks for each GuruFocus subscription region as of Friday.

Table 7