#-ad_banner-#Famed value investor Benjamin Graham once quipped: “When you can buy a dollar for 40 cents, you don’t have to worry about what the stock market is doing.” 

That simple credo perfectly sums up the theory of modern value investing — only purchase stocks that are trading at a sizeable discount to their intrinsic value.

Graham’s mantra is similar to that age-old Wall Street mantra to “buy low and sell high.” It sounds simple enough, but it is deceptively complex in practice. 

The truth is value investing can often require leaning against the consensus view and looking for pockets of value in less glamorous sectors and not-so-obvious stocks. Other times they’re right in front of your face the whole time. 

Below, I profile two companies that I think they may just be the most undervalued stocks in America.

Cisco Systems, Inc. (Nasdaq: CSCO)
Cisco is among the market’s best-known stocks. It’s a dominant firm in a high-margin business.

During the past five fiscal years, Cisco’s revenue rose from $36 billion in 2009 to $47 billion in fiscal 2014 — an increase of 31%. Despite the rise in sales, earnings have held steady. Under normal circumstances, that’s a red flag. But in this case, Cisco has found a different way to enrich its investors. 

During the past five years, the firm has increased its annual free cash flow to $11.1 billion for fiscal 2014 from $8.9 billion in 2009 — an increase in line with revenues. Free cash flow is the amount of money a company earns from its day-to-day business, less any capital expenditures like new equipment or factories. 

With its massive free cash flow, Cisco has built one of the most impressive balance sheets I’ve ever seen. Specifically, cash and short-term investments have soared from $26 billion at the end of fiscal 2008 to nearly $52.1 billion today. 

To put that in perspective, Cisco’s $52 billion cash stockpile equates to $10.25 per share — or more than one-third of the company’s current share price. 

And Cisco is putting that mountain of cash to good use. 

Last year alone, the company bought back $7.5 billion of its own stock. And since initiating a dividend in 2011, the firm’s payout has increased dramatically — from $0.12 per share in 2011 to a $0.72 per share dividend today. That’s good for a 2.8% yield.

To get a more accurate picture of just how undervalued Cisco is, I like to use what I call my “adjusted value ratio.” To find the adjusted value ratio, I use enterprise value (EV) instead of price. Enterprise value is essentially the amount of money it would take to buy the company outright. It takes the company’s market capitalization, adds in debt and subtracts out cash and cash equivalents. 

I then divide enterprise value by the company’s cash flow from operations (CFO). This figure is essentially how much the company’s main business earns in normal operations. It strips out “one-time” items like spin-offs and provides a much more accurate picture of how much cash a company is generating. 

Take a look at how Cisco measures up to a few other market giants. 
 

Action To Take–> On the basis of the adjusted value ratio — which I think is a more accurate picture of a company’s valuation — Cisco clearly represents one of the best deals on the market.

Intel Corp. (Nasdaq: INTC) 
​You likely already know about Intel, the world’s largest semiconductor maker. In fact, the computer you’re reading this on is likely powered by an Intel chip. 

Some people may see the stock as “boring” and say that it hasn’t gone anywhere for years. But I see something different — Intel’s shares are becoming more valuable quarter after quarter, and the share price is starting to reflect that. 

Today the company has sales totaling more than $12 billion every quarter and gross margins in excess of 60%. That puts Intel’s margins in the same neighborhood as some of the tech industry’s most profitable companies, including Google and Microsoft. And it’s significantly higher than Apple’s gross margin. 

Yet right now, you can buy shares of Intel at a forward P/E of just 12 — a 34% discount to the S&P 500. But like I mentioned earlier, earnings don’t always tell the full story, and there’s even more to like about Intel’s growth prospects. 

You see, on March 27, stories broke in the financial press that Intel was looking at the biggest acquisition in its corporate history, reportedly considering a bid for Altera (Nasdaq: ALTR) — a maker of programmable chips, largely for the mobile communications industry. 

The news got investors’ attention, with shares of Altera jumping 28% on the day reports emerged (Intel has gained 19% since the report). 

Altera has a market capitalization around $15 billion, which would make it Intel’s largest corporate buyout ever. This shows just how motivated the firm may be to get a hold of Altera’s technology, markets and revenue streams. 

Action To Take–> Intel’s apparent interest in Altera is a product of the global trend toward mobile devices as the preferred way to access the e-world. Tapping into this world could prove to be a highly lucrative move for Intel — allowing it access to a new $2.2 trillion opportunity. 

And today you can buy shares of Intel at just a 6.7 adjusted value ratio (AVR). As an industrial giant in the technology sector, Intel’s a great stock to own for the long term. At it’s current price level, the stock is heavily undervalued.

P.S. Intel isn’t the only company preparing to profit from the massive mobile tech revolution. Another overlooked company owns a near-monopoly on a key piece of technology making it all happen.

My findings have led me to conclude that its share price could soon skyrocket as much as 1,000% in the very near future. To learn more about this company’s growth prospects — and how it can soon land you near-quadruple-digit gains — please click here.