Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Leo Fisher who wrote (60123)	11/24/2017 11:55:58 PM
From: E_K_S	2 Recommendations Recommended By Frank Sauer Lance Bredvold Read Replies (2) \| Respond to of 78714

GN = Graham Number What is the 'Graham Number' - The Graham number is a figure that measures a stock's fundamental value by taking into account the company's earnings per share and book value per share. The Graham number is the upper bound of the price range that a defensive investor should pay for the stock. According to the theory, any stock price below the Graham number is considered undervalued, and thus worth investing in. The formula is as follows: Read more: Graham Number investopedia.com Follow us: Investopedia on Facebook -------------------------------------------------------------------- When I do a GN value trade, I will usually sell at the GN valuation and/or have that stock tagged 'as a source of funds'. KMB has a very low GN valuation since their BV=$0.79/share and on some valuation measures is considered a high priced stock. Kimberly-Clark Corporation (NYSE:KMB) ERP5 Score in Focus If you search upthread you can see some discussion on TIS and their debt covenant issues. Their debt was incurred for a new state of the art paper facility/equipment and must be rolled into either (1) equity maybe a 2nd offering, (2) long term debt financing - bonds or preferreds so their 7 year note is paid down/off. It is possible TIS could dilute shares by 20% if they did an all equity offering to pay off their capital asset note. The paper industry is typically considered non cyclical. TIS is a special situation where they exceeded their manufacturing capacity and had to build a 2nd facility. When their new plant is at 95% utilization, EPS s/d grow again and w/ better operating efficiencies/margins. I estimate 2018 earnings could be as high as 1.25/share which would make a $18.64/share GN valuation or about 33% undervalued. Therefore, of the three paper companies UFS, KMB and TIS, TIS is the most undervalued by the GN model. I expect at some point, TIS will re-establish their dividend (a 5% div history before construction of ne facility). Howard Marks, The Most Important Thing: Uncommon Sense for the Thoughtful Investor (Columbia Business School Publishing). . . ."This is that rarity, a useful book."--Warren Buffett Howard Marks Shares One Of The Most Important Rules To Investing Rule 1: most things will prove to be cyclical Rule 2: some of the greatest opportunities for gain and loss come when other people forget rule number 1. Good Investing EKS