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 |