An overview of the Economic Outlook for U.S. Stock Market can be found at the following:

## Asymmetric Allocation: Saints & Sinners Market Neutral Trade With Tandy Leather & Newell Brands

Buy Tandy Leather (NASDAQ:TLF) and Short Newell (NYSE:NWL).

Saints win +19 to +1 for Sinners. Will there be salvation for the lost? May be if you do a market neutral trade where you long Tandy and short Newell . Hope you enjoyed my hedge fund idea. Please let me know what you think by commenting below. The following is a summary of analysis:

Saints: | Sinners: | |

Economic profit | 1.7 | -807.87 |

Forward PE | Estimated to be the same 10.87 | 17.18 |

EPS growth rates (average) | 2.82 | 1.36 |

EPS growth rates (estimates) | N/A: Assume Median long-term growth rate of 9.80 | 13.88 |

PEG | 1.11 | 1.24 |

Average sales growth | 3.82 | 9.36 |

Price-to-sales | 0.88 | 2.12 |

Net margin | 8.11 | 3.91 |

Debt-to-equity | 11.9 | 106.5 |

TIE | 34.8 | 2.6 |

F-Score | 5 | 5 |

Z-Score | 4.89 | 0.90 |

M-Score | N/A | -1.21 |

ROE | 13.5 | 7.7 |

Magic Formula: earnings yield | 0.17 | 0.01 |

Magic Formula: ROC | 0.19 | 0.11 |

CCC: DSO | 2.40 | 127.05 |

CCC: DSI | 396.30 | 84.61 |

CCC: DPO | 16.12 | 104.61 |

CCC | 382.58 | 107.05 |

Owner’s earnings yield | 0.08 | 0.01 |

Gross profit-to-total assets | 0.78 | 0.08 |

Average valuation | $18.82 | $56.72 |

Margin of safety | 60% | 7% |

Put-call ratio | N/A | 0.58 |

Short interest ratio | 2.02 | 4.14 |

Short percentage of float | 0.25% | 3.22% |

Why? Checkout my newest Asymmetric Allocation article for a play by play analysis of the money game: http://www.gurufocus.com/news/455009/affid/127983

## Deep Value Investing Opportunity with Citigroup

## Economic Outlook for 10/01/2016

An overview of the Economic Outlook for U.S. Stock Market can be found at the following:

## Economic Outlook for 09/01/2016

An overview of the Economic Outlook for U.S. Stock Market can be found at the following:

## Discounted Cash Flow (DCF) Model for Citigroup as of 08/05/2016

Please see the following link for a copy of the DCF Model:

## 22% Plus Upside for Wells Fargo

Please see my latest Seeking Alpha article at the following link:

## Discounted Cash Flow (DCF) Model for Wells Fargo as of 08/01/2016

Please see the following link for a copy of the DCF Model:

## Graham Fusion: Combining Benjamin Graham’s Formula and Number

The father of value investing (Benjamin Graham) created two financial models: 1) Graham Formula and 2) Graham Number. By combing the two ideas, I developed the Graham Fusion model. This article explains this modern twist of two timeless principles.

To explain how I came up with the Graham Fusion model I first need to review the basic Graham Formula and Graham Number.

# What is the Graham Formula?

V = EPS * (8.5 + (2 * g))

Where:

- V = Intrinsic value
- EPS = Trailing 12-month earnings per share
- 5 = P/E base for a no-growth company
- g = reasonably expected 7 to 10-year growth rate

For more about the Graham Formula, please see the following link:

https://en.wikipedia.org/wiki/Benjamin_Graham_formula

# What is the Graham Number?

Graham Number = (22.5 * EPS * BVPS) ^ 0.5

Where:

- 5 = 15 multiplier for earnings times 1.5 multiplier for book value
- EPS = Trailing 12-months earnings per share
- BVPS = Book value per share

For more about the Graham Formula, please see the following link:

https://en.wikipedia.org/wiki/Graham_number

# What is the Graham Fusion model?

By rearranging the Graham Formula, you get V/EPS = (8.5 + (2 * g)). Essentially, V/EPS is a fair price earnings multiple (PE multiple). Then I insert this in place of the 15 multiplier in the Graham Number. By using (8.5 + (2 * g)), you incorporate a dynamic PE multiple based on growth, which is better than the static 15 multiplier.

What I found the 1.5 multiplier for book value did not always make sense. Certain sectors and industries have different acceptable price to book ratios. As a result, you use a normalized sector or industry price to book ratio.

Therefore, the Graham Fusion model is:

- ((8.5 + (2 * g)) * Normalized Sector or Industry Price to Book Ratio * EPS * BVPS) ^ 0.5

You can find Industry Price to Book Ratios at the following link:

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pbvdata.html

# How good is this valuation method?

Let’s check trusted sources to see how this method holds up.

Morningstar’s Fair Value Estimate for Apple it is $133.00

Value Line’s Target Price Range for Apple is $150.00 to $205.00

Based on the following assumptions:

- EPS growth rate of 9.23%
- Normalized Industry Price to Book Ratio of 2.72
- EPS = $9.04
- BVPS = $23.66

Apple’s Graham Fusion number is:

- $125.24 = ((8.5 + (2 * 9.23)) * 2.72 * 9.04 * 23.66) ^ 0.5

# Conclusion

This is an improvement to the original financial models. Compared to Apple’s Graham Formula of $243.72 = 9.04 * (8.5 + (2 * 9.23)) or Apple’s Graham Number of $69.37 = ((15 * 1.5 * 9.04 * 23.66) ^ 0.5, the Graham Fusion appears to be a better valuation model. Hope this new valuation model helps increase the value of your portfolio!

For a copy of this article, please see the following PDF file:

## Simple Stock Valuations Using the Enterprise Multiple

To learn how you can value companies simply by using the Enterprise Multiple, please see the following article: