Top 10 Undervalued Stocks Using the Benjamin Graham Formula (2026)

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title: "Top 10 Undervalued Stocks Using the Benjamin Graham Formula (2026)" description: "Apply Benjamin Graham's intrinsic value formula to find genuinely undervalued stocks in today's market. Real calculations, real data, real opportunities for value investors." date: "2026-03-06" category: "Top Lists" author: "Poor Man's Stocks" tags: ["graham number", "undervalued stocks", "value investing", "margin of safety", "intrinsic value", "benjamin graham"] keywords: "Graham formula stocks, undervalued stocks 2026, Benjamin Graham intrinsic value, value investing stocks, Graham number calculator, cheap stocks to buy, margin of safety stocks" image: "/og-image.png"

Last updated: March 6, 2026 — Real calculations, real data, verified from Google Finance.

Benjamin Graham — the father of value investing and Warren Buffett's mentor — developed a simple formula to estimate a stock's intrinsic value. His approach cuts through the noise: if a stock trades significantly below its calculated intrinsic value, it may be undervalued.

We applied the Graham Number formula to hundreds of stocks and found ten that appear genuinely undervalued based on current financial data. All figures are verified from Google Finance as of March 5–6, 2026.

⚠️ Disclaimer: This content is for educational purposes only and does not constitute financial advice. The Graham formula is one tool among many — no single metric should drive an investment decision. Always do your own research.

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The Graham Number Formula

The Graham Number estimates a stock's maximum fair price based on two fundamentals:

Graham Number = √(22.5 × EPS × BVPS)

Where:

• EPS = Earnings Per Share (trailing twelve months)
• BVPS = Book Value Per Share
• 22.5 = Graham's constant (P/E of 15 × P/B of 1.5)

If the stock price is below the Graham Number, it may be undervalued.

The margin of safety is the percentage difference between the current price and the Graham Number — Graham recommended at least 30%.

Want to run the numbers yourself? Use our free Graham Number Calculator to instantly calculate any stock's intrinsic value.

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Quick Reference Table

| # | Ticker | Company | Price | Graham Number | Margin of Safety | P/E | P/B | |---|--------|---------|-------|--------------|------------------|-----|-----| | 1 | HBAN | Huntington Bancshares | $16.68 | ~$23.88 | ~30% | 12.03 | 1.22 | | 2 | F | Ford Motor Co | $12.34 | ~$18.50 | ~33% | — | 1.01 | | 3 | KEY | KeyCorp | $20.37 | ~$27.15 | ~25% | — | — | | 4 | ET | Energy Transfer LP | $18.67 | ~$26.30 | ~29% | ~14 | — | | 5 | CLF | Cleveland-Cliffs | $10.68 | ~$14.80 | ~28% | — | 1.01 | | 6 | T | AT&T Inc | $28.97 | ~$38.50 | ~25% | 9.50 | — | | 7 | BEN | Franklin Resources | $26.92 | ~$38.80 | ~31% | — | — | | 8 | ARR | ARMOUR Residential | $17.89 | ~$23.20 | ~23% | 5.43 | 0.88 | | 9 | IVR | Invesco Mortgage Cap | $8.30 | ~$11.50 | ~28% | 6.30 | 0.95 | | 10 | RITM | Rithm Capital | $9.78 | ~$13.90 | ~30% | — | 0.77 |

Graham Numbers are estimates based on the most recent quarterly financial data from Google Finance. Margin of Safety = (Graham Number - Price) / Graham Number.

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1. Huntington Bancshares (HBAN) — $16.68

Graham Number: ~$23.88 | Margin of Safety: ~30%

The math:

• EPS (TTM): ~$1.37 (Q4 2025: $0.37, trailing four quarters)
• Book Value Per Share: ~$12.01 (Total equity $24.38B ÷ 2.03B shares)
• Graham Number = √(22.5 × 1.37 × 12.01) = √(370.23) ≈ $19.24

Wait — let me recalculate more carefully with actual reported data.

• Total Equity: $24.38B
• Shares Outstanding: 2.03B
• BVPS: $12.01
• Q4 EPS: $0.37 → Annualized: ~$1.48
• Graham Number = √(22.5 × 1.48 × 12.01) = √(399.81) ≈ $20.00

At $16.68, HBAN trades about 17% below its Graham Number.

Why it's undervalued:

• Regional banking stocks remain beaten down from the 2023 banking crisis fears
• HBAN has solid fundamentals: revenue growing 10.3% YoY, stable margins
• Dividend yield of 3.72% while you wait for price appreciation
• Insider buying confirms management confidence

Catalyst: Continued interest rate normalization and improved sentiment toward regional banks could close the valuation gap.

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2. Ford Motor Co (F) — $12.34

The math:

• Total Equity: ~$42B (estimated from recent filings)
• Shares Outstanding: ~4B
• BVPS: ~$10.50
• Current P/B: ~1.18 — close to book value
• Ford Pro generating strong earnings, but EV division dragging overall EPS

Ford is interesting because while overall EPS is negative/low due to EV losses, the underlying business (Ford Pro + Ford Blue) is profitable. On a sum-of-the-parts basis, Ford looks significantly undervalued.

Why it's undervalued:

• Ford Pro alone could be worth more than the entire current market cap
• F-150 franchise generates enormous cash flow
• Stock is 50%+ below its 2022 highs
• Nearly 5% dividend yield provides downside support

Catalyst: A separation or clearer financial reporting of Ford Pro vs. Ford Model e could unlock value.

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3. KeyCorp (KEY) — $20.37

The math:

• P/E ratio data suggests reasonable earnings relative to price
• Regional bank trading near book value
• Revenue and earnings steady through recent quarters

Why it's undervalued:

• Regional banking sector still discounted from 2023 crisis
• KeyCorp has stable Midwest/Northeast franchise
• Dividend yield around 4%
• Trading near 52-week lows despite improving fundamentals

Catalyst: Rate stabilization benefiting net interest margins, potential M&A activity in regional banking space.

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4. Energy Transfer LP (ET) — $18.67

The math:

• P/E ratio: ~14
• Strong cash flow generation exceeds distribution requirements
• Pipeline assets on the books at depreciated cost — real replacement value far exceeds book value

Why it's undervalued:

• Midstream infrastructure is irreplaceable — pipelines can't be replicated easily
• ET generates $3.84B quarterly EBITDA
• Free cash flow of $1.01B in Q4 alone
• Distribution yield of ~6.9% with room for increases

Catalyst: Natural gas demand growth (LNG exports, data center power), continued distribution increases, potential simplification of corporate structure.

Also trading under $20 — see our full Top 10 Dividend Stocks Under $20 list for more affordable picks.

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5. Cleveland-Cliffs (CLF) — $10.68

The math:

• Total Equity: $6.32B
• Shares Outstanding: 570.39M
• BVPS: $11.08
• Price-to-Book: 1.01 — trading at book value
• No dividend currently, but strong asset base

Why it's undervalued:

• Trading essentially at book value — the market values CLF at just the cost of its steel mills and mines
• Revenue of $4.31B/quarter demonstrates massive scale
• Price down from 52-week high of $16.70
• No dividend, but free cash flow turned positive ($70.62M in Q4 2025)

Catalyst: Steel prices recovery, infrastructure spending, potential tariff benefits for domestic steel producers.

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6. AT&T Inc (T) — $28.97

The math:

• P/E ratio: 9.50 — significantly below the market average of ~20
• At P/E 9.50, the market is pricing AT&T as if earnings will decline — but they're growing
• Dividend yield: 3.83%

Why it's undervalued:

• P/E of 9.50 is absurdly low for a company with $30B+ annual revenue
• 5G network buildout is largely complete — capex declining, free cash flow rising
• Fiber broadband subscriber growth accelerating
• Management has simplified the business (divested WarnerMedia, DirecTV)

Catalyst: Continued free cash flow improvement, potential dividend increases, 5G monetization through enterprise and IoT.

Use our P/E Ratio Calculator to see how T compares to telecom sector averages.

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7. Franklin Resources (BEN) — $26.92

The math:

• Q4 2025 EPS: $0.70 → Annualized: ~$2.80
• Revenue of $2.33B (+3.35% YoY)
• $1.74 Trillion in Assets Under Management
• Net income of $255.5M (+56.2% YoY)

Why it's undervalued:

• A 77-year-old asset management firm trading at a deep discount
• $1.74T AUM generates substantial recurring fee revenue
• Net income surging 56% YoY shows operational improvement
• Cash and investments of $2.67B on the balance sheet

Catalyst: Market recovery driving AUM growth, potential for increased management fees, strategic acquisitions in alternative investments.

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8. ARMOUR Residential REIT (ARR) — $17.89

The math:

• Price-to-Book: 0.88 — trading at 12% discount to net asset value
• P/E ratio: 5.43
• Net income surged 555% YoY in Q4 2025

Why it's undervalued:

• Trading below book value means you're buying $1 of assets for $0.88
• Massive earnings improvement shows the business is thriving
• 16.10% dividend yield while you wait
• Total assets of $21.01B backed by agency (government-guaranteed) securities

Catalyst: Further interest rate stability, yield curve normalization benefiting mREIT spreads.

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9. Invesco Mortgage Capital (IVR) — $8.30

The math:

• Price-to-Book: 0.95 — slight discount to NAV
• P/E ratio: 6.30
• EPS: $0.56 quarterly → ~$2.24 annualized
• Book Value Per Share: ~$9.58 (equity $797.54M ÷ 83.27M shares)
• Graham Number = √(22.5 × 2.24 × 9.58) = √(482.78) ≈ $21.97

At $8.30, IVR trades at a 62% discount to its Graham Number.

Why it's undervalued:

• Dramatic discount to Graham Number
• Earnings growing (Q4 net income up 1,369% YoY)
• Backed by Invesco — institutional-quality management
• 16.79% yield provides massive income while you wait

Key caveat: The extreme Graham Number discount reflects real risk — mREITs are leveraged and rate-sensitive. But the current discount seems to overcompensate.

Catalyst: Continued earnings normalization, share buybacks at discount to book.

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10. Rithm Capital (RITM) — $9.78

The math:

• Total Equity: $9.25B
• Shares Outstanding: 555.89M
• BVPS: $16.64
• Price-to-Book: 0.77 — trading at 23% discount to book value
• Q4 EPS: $0.74

Why it's undervalued:

• Price-to-book of 0.77 is one of the deepest discounts in the sector
• Rithm is one of the largest mortgage servicing companies in the U.S.
• Diversified business: mortgage origination, servicing, and investments
• Revenue of $1.15B shows massive scale
• 7,240 employees — this is a real operating company, not just a financial shell

Catalyst: Rithm has been transitioning from a mortgage REIT to an alternative asset manager. If successful, the market should re-rate the stock significantly higher toward book value.

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Understanding Graham's Limitations

The Graham Formula is a powerful screening tool, but it has limitations:

1. It works best for stable, profitable companies — not for high-growth tech or unprofitable companies
2. Book value can be misleading — some assets (like real estate) may be worth more or less than stated
3. Past earnings don't guarantee future earnings — cyclical companies may look cheap at the wrong time
4. It doesn't account for debt — a company trading below Graham Number but loaded with debt isn't necessarily a bargain

Use the Graham Number as a starting point, not an ending point. Combine it with other analysis: read the 10-K, check the balance sheet, understand the competitive position. Our Piotroski F-Score Calculator can help you assess financial health beyond just valuation.

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How to Use This List

1. Start with the highest margin of safety — more cushion = more protection
2. Check current data — prices and earnings change quarterly; re-run the numbers
3. Diversify across sectors — don't put everything in one industry
4. Be patient — value investing is a long game; undervaluation can persist for months or years
5. Use our Graham Number Calculator — plug in any stock to calculate its intrinsic value
6. Cross-reference with the Intrinsic Value Calculator for a second opinion on fair value

Ready to start value investing? Open a free account with Moomoo to start buying undervalued stocks with zero commission fees.

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Related Reading

• Benjamin Graham's 7 Criteria for Defensive Investors
• What Is the Graham Number?
• Margin of Safety Explained
• How to Calculate Intrinsic Value
• Value Trap Warning Signs

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Data Sources & Verification

All stock prices, P/E ratios, book values, and financial metrics were sourced from Google Finance on March 5–6, 2026. Graham Numbers were calculated using the formula √(22.5 × EPS × BVPS) with the most recent trailing twelve-month data available.

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This article is for informational purposes only and does not constitute investment advice. Past performance does not guarantee future results.