When it comes to long-term investing, finding the valuation gap—the difference between a stock’s current market price (CMP) and its intrinsic value—can be a powerful strategy. This gap highlights opportunities where stocks may be undervalued, potentially setting up for strong future gains.
One of the most enduring methods for identifying these opportunities is grounded in the principles of Benjamin Graham, known as the father of value investing and a mentor to Warren Buffett. Graham's timeless strategies, detailed in his classic book The Intelligent Investor, remain a cornerstone for investors seeking long-term success. However, the landscape of today’s fast-moving markets, influenced by technological advancements, e-commerce growth, and algorithmic trading, brings greater challenges and volatility.
To navigate this modern complexity, investors can now turn to advanced tools that apply Graham’s principles with precision. One such tool is the “Ben Graham Formula,” available within InvestingPro+’s screener. This innovative feature enables investors to identify undervalued stocks by focusing on key metrics such as market capitalization while ignoring less essential factors like analysts’ targets and Return on Invested Capital (ROIC).
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A standout example using this screener is South Indian Bank (NS:SIBK). Based on Graham’s value principles, the stock appears undervalued. According to financial models available on InvestingPro+, the estimated fair value of the bank is INR 28.9 per share, indicating a 17.6% upside from its current price of INR 24.6. Moreover, analysts have set an average target price of INR 35.1, suggesting an even higher target and consequently a positive sentiment. When both the intrinsic value and analysts’ forecasts exceed the CMP, it signals a strong investment opportunity.
What sets InvestingPro+ apart is its ability to enhance traditional value investing through a blend of modern financial models. By generating multiple valuations and using the average to calculate a more realistic target price, the platform merges classic investment wisdom with cutting-edge analysis.
The “Ben Graham Formula” on InvestingPro+ empowers investors to integrate Graham’s strategies into their own portfolios with ease. Whether you're an experienced investor or a beginner, combining this timeless wisdom with modern technology can provide a significant edge in uncovering undervalued stocks in today’s dynamic market.
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