To create the list below we began with a universe of dividend stocks paying yields between 2% and 5%, and sustainable payout ratios below 50%. We chose this range to stay away from the more high-risk and unsustainable yields. We then screened for stocks that have outperformed the market over the last quarter, with quarterly performance above 10%. Finally, we screened for those that appear undervalued relative to the Graham Number.
The Graham Number is a measure of maximum fair value created by the "godfather of value investing" Benjamin Graham. It is based on a stock's EPS and book value per share (BVPS). Graham Number = SQRT(22.5 x TTM EPS x MRQ BVPS). Do you think these financials should be trading higher? Use this list as a starting point for your own analysis: The Allstate Corporation (ALL), Associated Banc-Corp (ASBC), Flushing Financial Corp. (FFIC), Fulton Financial Corporation (FULT) and Huntington Bancshares Incorporated (HBAN).
Source: Seeking Alpha
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