There are a number of great companies in the market today. By using the ModernGraham Valuation Model, I've selected five undervalued companies with a low beta reviewed by ModernGraham. A company's beta indicates the correlation at which its price moves in relation to the market. A beta less than 1 indicates a company is less volatile than the market. Each company has been determined to be suitable for either the Defensive Investor or the Enterprising Investor according to the ModernGraham approach. This is a sample of one screen that is included in ModernGraham Stocks & Screens. Defensive Investors are defined as investors who are not able or willing to do substantial research into individual investments, and therefore need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to do substantial research and can select companies that present a moderate (though still low) amount of risk.
With a low beta, Mr. Market may not hit these companies as harshly in a downturn, so be sure to check them out in depth! If you're interested in companies with a high beta instead, check out 5 Undervalued Companies with a High Beta – August 2015!
Cigna Corporation (CI)
Cigna Corporation qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with the evaluation. As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $4.11 in 2011 to an estimated $6.94 for 2015. This level of demonstrated earnings growth supports the market's implied estimate of 6.79% 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 within a margin of safety relative to the price. (See the full valuation)
