I evaluated 51 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. I also put each company through the ModernGraham valuation model based on Benjamin Graham’s value investing formulas in order to determine an intrinsic value for each. Out of those 51 companies, only 14 were found to be undervalued or fairly valued and suitable for either Defensive or Enterprising Investors.  Therefore, these companies are the best undervalued stocks of the week.
The Elite
The following companies were found to be suitable for either the Defensive Investor or Enterprising Investor and undervalued:
Alliance Data Systems Corp
Alliance Data Systems Corporation (ADS)Â is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the 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 $5.95 in 2013 to an estimated $11.27 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.87% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.
At the time of valuation, further research into Alliance Data Systems Corporation revealed the company was trading above its Graham Number of $107.83. The company pays a dividend of $0.52 per share, for a yield of 0.2% Its PEmg (price over earnings per share – ModernGraham) was 20.24, which was below the industry average of 21.9, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-103.34.  (See the full valuation)
Camden Property TrustÂ
Camden Property Trust (CPT) is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the high PEmg 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 Undervalued after growing its EPSmg (normalized earnings) from $2.26 in 2013 to an estimated $4.07 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.87% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.
At the time of valuation, further research into Camden Property Trust revealed the company was trading above its Graham Number of $31.26. The company pays a dividend of $3 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.24, which was below the industry average of 31.91, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  (See the full valuation)
Central Pacific Financial CorpÂ
Central Pacific Financial Corp. (CPF)Â is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten 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 (normalized earnings) from $-31.16 in 2013 to an estimated $1.58 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.72% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.
At the time of valuation, further research into Central Pacific Financial Corp. revealed the company was trading above its Graham Number of $23.27. The company pays a dividend of $0.6 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 19.94, which was below the industry average of 21.43, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  (See the full valuation)
KB Home
KB Home (KBH)Â is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.
