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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (46124)	1/7/2012 3:54:16 PM
From: E_K_S	Read Replies (3) of 78704

Hi Paul - A look at some of the discussed retailers using the Graham Number screen. When scanning several of the retailers (WAG,COST, WMT, TGT SHLD, JCP, PSMT, HD) and calculating the Graham No. for valuation, the only one in the group that comes close to a bargain is WAG. TGT is a close 2nd and probably my favorite all around retailer in the group (based on value & product offerings). With a GN value of $46.90, the stock is 4% overvalued but well w/i the fair value margins (especially when you compare the GN to all of the other candidates). Stock Graham # Current Price % Over Valued ---------------------------------------------------------------------------------------- WAG $33.45 $33.08 1% UNDERVALUED! TGT $46.90 $48.95 4.36% WMT $45.55 $59.00 29% COST $45.20 $81.00 79% JCP $20.96 $34.96 66% PSMT $24.37 $60.63 148% HD $24.53 $43.20 75% SHLD N/A $28.20 Note: Can't calculate w/ negative earnings (ie losses) If companies can grow their BV and/or earnings the GN will move higher. Also, BV may be understated if companies own a lot of company owned real estate (like HD & JCP) since the BV shows the value at cost not market value. I was surprised to see WAG with a positive 1% undervalued number. They lost their script contract to other vendors. Maybe future earnings will be lower as a result and the current GN overstates current fair value. For me, my value buy would be TGT but at this time I own no retailers even though I like COST the best for shopping. I also spend quite a bit of money at HD especially with my recent remodel projects. I like Target in general but think their recent grocery section is a looser. Both their produce & meat section (at least in my area) are inferior to what is available locally. They just do not move the volume to keep items fresh. EKS

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