- Graham Holdings stock suffering mainly from COVID-19 economic shutdowns

- As world economy recovers after COVID-19 containment, GHC could rise 20%

- Lowly valued stock could rise 50% long term as GHC returns to historical growth rate

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I’m looking ahead to a time when the coronavirus (COVID-19) is eventually contained and economic activity resumes. That said, if you don’t agree with that assessment, that the world economy has worsened permanently, then stop here.  

As COVID-19 fears fade, I view Graham Holdings (GHC) as undervalued. On Wednesday, the (class B) shares were quoted around $344, up from $268 at the market’s March bottom, but still down from $756, the 52-week high.  The current stock level was first reached back in 2013, when GHC earned $32 per share (including the cable business that was spun out in 2015). EPS was $61 in 2019.  More on this below. GHC offers an unusual mix of businesses, spanning education services (half of revenue) to media (broadcast) to manufacturing, healthcare and even restaurants.

There are a number of factors in favor of this depressed stock, but the main catalyst, as I see it, is a return to a more normal world economy, which could mean a 20% rise in the medium term. Longer term...

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