Having penned The Intelligent Investor and Security Analysis, and mentored Warren Buffett, Benjamin Graham has cemented his place in investing history.
A couple of years after the 1973-1974 bear market (strikingly similar to our current market conditions), the Dean of Wall Street offered this advice in an interview published in the Financial Analysts Journal: "The individual investor should act consistently as an investor and not as a speculator. This means, in sum, that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning."
At another point, he said: "[My advice] consists of buying groups of stocks at less than their current or intrinsic value as indicated by one or more simple criteria. The criterion I prefer is seven times the reported earnings for the past 12 months."
Following that advice, I used our new CAPS screening tool to find stocks Graham might find interesting. Each has:
- A price-to-earnings ratio no higher than 7.
- Long-term debt-to-equity ratio less than 1.
- At least four stars in Motley Fool CAPS.
Remember, despite the recent market turmoil, four-star companies outperformed the market with an average gain of more than 7% annualized. Five-star stocks did even better.
|
Company |
Price |
P/E (TTM) |
Debt-to-Equity |
|---|---|---|---|
|
Allegheny Technologies (NYSE:ATI) |
$45.89 |
6.8 |
0.22 |
|
Cal-Maine Foods (NASDAQ:CALM) |
$40.45 |
6.1 |
0.36 |
|
Frontier Oil (NYSE: FTO) |
$19.01 |
4.0 |
0.15 |
|
Harvest Natural Resources (NYSE:HNR) |
$9.36 |
5.3 |
0.00 |
|
Ingersoll-Rand (NYSE:IR) |
$36.69 |
3.3 |
0.09 |
|
Montpelier Re (NYSE:MRH) |
$16.11 |
5.7 |
0.22 |
|
Terex (NYSE:TEX) |
$44.84 |
6.2 |
0.50 |
Data from Motley Fool CAPS as of Aug. 5. TTM = trailing 12 months.
Do you think Graham would like these? Do you have ideas of your own about whether these stocks are worth looking into? Come and join us on Motley Fool CAPS to share your opinion with the 110,000 (and growing) members.
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