The following 10 companies have demonstrated strong financial positions through passing the rigorous requirements of the ModernGraham Investor and show potential for capital growth based on their current price in relation to intrinsic value. As such, these Graham Number stocks may be a great investment if they prove to be suitable for your portfolio after your own additional research.

The original articlehas been edited here for length (…) and clarity ([ ])

…The companies selected…have been valued as undervalued based on the ModernGraham valuation model. The full list can be found in the latest issue of my monthly Stocks & Screens report; however, to cut down on the length of the post, I've selected the ten which trade furthest below their Graham Number.

1. Lincoln National Corporation (LNC)

Lincoln National Corporation…

appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.25 in 2014 to an estimated $7.21 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.03% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price…

was trading below its Graham Number of $121.79 at the time of valuation…

pays a dividend of $0.87 per share, for a yield of 1.1%…

PEmg (price over earnings per share ? ModernGraham) was 10.56, which was below the industry average of 20.16, which by some methods of valuation makes it one of the most undervalued stocks in its industry.(See the full valuation)

(Click on image to enlarge)

2. Signet Jewelers Ltd. (SIG)

Signet Jewelers Ltd….

appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.86 in 2014 to an estimated $6.07 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 0.22% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

was trading below its Graham Number of $61.99 at the time of valuation…

pays a dividend of $1.04 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today…

PEmg (price over earnings per share ? ModernGraham) was 8.06, which was below the industry average of 30.22, which by some methods of valuation makes it one of the most undervalued stocks in its industry…

appears to be Undervalued after ?growing? its EPSmg (normalized earnings) from $4.19 in 2014 to an estimated $4.19 for 2018. This level of earnings growth (even though the earnings didn't actually grow) outpaces the market's implied estimate of 1.57% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

was trading below its Graham Number of $34.59 at the time of valuation…

pays a dividend of $0.38 per share, for a yield of 1.7%

PEmg (price over earnings per share ? ModernGraham) was 5.36, which was below the industry average of 35.42, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.28 in 2014 to an estimated $2.89 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 0.48% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

was trading below its Graham Number of $41.25 at the time of valuation…

pays a dividend of $0.88 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today.

PEmg (price over earnings per share ? ModernGraham) was 9.46, which was below the industry average of 20.37, which by some methods of valuation makes it one of the most undervalued stocks in its industry…

was trading above its Net Current Asset Value (NCAV) of $-26.44.(See the full valuation)(Click on image to enlarge)

5. Invesco Ltd. (IVZ)

Invesco Ltd.

appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $2.63 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.87% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price…

was trading below its Graham Number of $38.6 at the time of valuation…

pays a dividend of $1.15 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today.

PEmg (price over earnings per share ? ModernGraham) was 12.24, which was below the industry average of 21.55, which by some methods of valuation makes it one of the most undervalued stocks in its industry…

was trading above its Net Current Asset Value (NCAV) of $-14.2.(See the full valuation)(Click on image to enlarge)

6. Principal Financial Group Inc. (PFG)

Principal Financial Group Inc….

appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.9 in 2014 to an estimated $5.62 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.21% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price.

was trading below its Graham Number of $74.18 at the time of valuation…

pays a dividend of $1.87 per share, for a yield of 3%, putting it among the best dividend paying stocks today.

PEmg (price over earnings per share ? ModernGraham) was 10.92, which was below the industry average of 20.16, which by some methods of valuation makes it one of the most undervalued stocks in its industry.(See the full valuation)

appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.9 in 2014 to an estimated $5.62 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.21% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price.

was trading below its Graham Number of $74.18 at the time of valuation.

pays a dividend of $1.87 per share, for a yield of 3%, putting it among the best dividend paying stocks today…

PEmg (price over earnings per share ? ModernGraham) was 10.92, which was below the industry average of 20.16, which by some methods of valuation makes it one of the most undervalued stocks in its industry.(See the full valuation)

(Click on image to enlarge)

8. Bank of America Corp. (BAC)

Bank of America Corp….

appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.41 in 2014 to an estimated $1.72 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 4.31% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price.

was trading below its Graham Number of $35.85 at the time of valuation…

pays a dividend of $0.39 per share, for a yield of 1.3%

PEmg (price over earnings per share ? ModernGraham) was 17.12, which was below the industry average of 24.17, which by some methods of valuation makes it one of the most undervalued stocks in its industry.(See the full valuation)(Click on image to enlarge)

9. AFLAC Incorporated (AFL)

AFLAC Incorporated…

appears to be Undervalued after growing its EPSmg (normalized earnings) from $6.07 in 2014 to an estimated $8.08 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.21% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price.

was trading below its Graham Number of $103.31 at the time of valuation…

pays a dividend of $1.74 per share, for a yield of 2%…

PEmg (price over earnings per share ? ModernGraham) was 10.92, which was below the industry average of 22.76, which by some methods of valuation makes it one of the most undervalued stocks in its industry.(See the full valuation)(Click on image to enlarge)

10. AT&T Inc. (T)

AT&T Inc….

appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $3.17 for 2018. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.36% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price….

was trading below its Graham Number of $41.02 at the time of valuation…

pays a dividend of $1.97 per share, for a yield of 5.5%, putting it among the best dividend paying stocks today….

PEmg (price over earnings per share ? ModernGraham) was 11.23, which was below the industry average of 41.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry…

was trading above its Net Current Asset Value (NCAV) of $-36.26.(See the full valuation)(Click on image to enlarge)

Knowing how to properly value a stock is probably the most important skill for a value investor to develop and over the last fifty years one of the most popular methods to discover the fair price of a stock has been the Benjamin Graham formula.

Benjamin Graham's The Intelligent Investor is one of a handful of books you hear mentioned over and over again when you ask investors to name the best investing books of all-time. Graham was far ahead of his time in talking about investor behavior and human psychology in terms of the role they play in shaping how markets and investors generally work. Let me explain.

My portfolio version of Benjamin Graham's time- tested strategy for defensive investors has has only trailed the markets in 3 of the last 12 years and has dramatically outperformed the S&P 500 during that period realizing a 19% (annualized) return vs. only 2% (annualized) for the S&P 500. Let's take a look at the method and this year's group of Graham stocks.

Benjamin Graham, the ?godfather of value investing? created an equation to calculate the maximum fair value for a stock, referred to as the Graham Number and any stock trading at a significant discount to this number would appear undervalued. [Here are the names of 18 such stocks.]

While the average amateur investor may be excellent in their own career field, it doesn't mean they know what to invest in, or how to pick stocks. In fact being very good at your field can give you the false sense that whatever stocks you pick or your broker picks for you must be good, because after all, you picked them and you picked your broker ? and you're smart so, no doubt, those stock prices will go up. Unfortunately, the smart and talented stock-picking neophyte is not investing at all but speculating.

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