Benjamin Graham observed that real key to successful investing is not just identifying high quality companies with good growth prospects. It is to buy such companies as cheaply as possible, leaving what he called a "margin of safety." The margin protects the investor against forecasting errors and the tyranny of "events." Two approaches are presented here: Growth model: This is the ratio of the PE ratio to the sum of dividend yield and estimated EPS growth rate. If it is less than one, then the stock is presumed to be selling at a discount to its growth prospects. It is a variant of the socalled PEG ratio. Cash flow model: This approach compounds free cash flow plus common stock dividends forward for 10 years at the estimated EPS growth rate. It then capitalizes that cash flow in the 10th year at the modest rate of 10%. Lastly it discounts this stream of cash flows at the historical equity return of 9% (after inflation) and divides the result into Market cap minus cash on hand. If this ratio is less than one, then the stock is presumed to be selling at a discount to its enterprise value. Investigate the margin of safety for your favorite stock by inputting the relevant variables into the interactive model below. 
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