Some Benjamin Graham Stock Picks!

December 27th, 2006 Category:Home, Investing

Mr. Norman Rothery at the Canadian Moneysaver magazine uses the Graham stock criteria to screen for stocks on a yearly basis. For those of you who don’t know who Benjamin Graham is, he is also known as the “Father of Value Investing”. He is the mentor of the greatest investor of all time, Warren Buffet.

Anyways, back on point, Rothery started publishing the stock screen and results in the year 2000. Below is a chart of the results thus far:

Year	Graham	S&P500	+/-
2000-2001	20.4%	-22.2%	42.6
2001-2002	28.2%	-15.1%	43.3
2002-2003	56.8%	16.5%	40.3
2003-2004	32.2%	9.4%	22.8
2004-2005	46.6%	12.8%	33.8
2005-2006	-3.8%	10.7%	42.6
Overall	351.4%	1.0%	350%

If you were to take the stock picks from Mr. Rothery/ Graham since the year 2000, you would have a 350% return. Not too shabby compared to the S&P return of 1%.

Here is the stock screen criteria used:

P/E Ratio < 15
P/B Ratio < 1.5
Book Value > 0.01
Current Ratio > 2
Annual EPS Growth (5-yr avg) > 3%
5-Year Dividend Grwoth > 0%
5-Year P/E Low > 0.01
1-Year Revenue > $400 Million

Here are the results for of the screen (Sept 27, 2006):

Blair (BL)

Briggs & Stratton (BGG)

Seaboard(SEB)

Media General (MEG)

Teekay Shipping (TK)

Overseas Shipholding (OSG)

Gibralter Industries (ROCK)

Schnitzer Steel (SCHN)

This screen can be EASILY replicated using MSN’s free stock sceener. The Graham strategy is to purchase deeply discounted strong companies but sell them when you reach a 50% profit or by the end of the year.

Be wary though, no matter what stocks that a stock screener spits out, you need to do your own due diligence on the companies before purchasing.

Happy Investing!

Be Wise… and Be Stingy..

9 Responses to “Some Benjamin Graham Stock Picks!”

on 29 Dec 2006 at 5:30 am hustlermoneyblog

Your site is great. I like all the advice and tips. If you like to add my website to your blogroll, I would be happy to do the same. thanks
on 29 Dec 2006 at 2:58 pm Interesting Links - December 29, 2006 - Million Dollar Journey

[…] Some Benjamin Graham Stock Picks […]
on 04 Jan 2007 at 7:53 pm Tim Brown

hi there, I went to the microsoft website you suggested and wasn’t able to figure out the formula for how to use the stock screener to input some of the data you suggested. eg. 5-Year Dividend Grwoth > 0%.. how do you figure that out in the search? Help!
on 04 Jan 2007 at 8:03 pm StingyJoe

Hi Tim,

Go to the following website with INTERNET EXPLORER:
http://moneycentral.msn.com/investor/finder/customstocks.asp

Click on an empty “Field Name” then select “Growth Rates” then “5 Year dividend growth”. Go to the “Operator” field, select “>=” then in the value select “custom value” then type your value (0).

Hope this helps!

StingyJoe
on 05 Jan 2007 at 2:10 am Tim Brown

i was using firefox which is why it dont work. thx
on 05 Jan 2007 at 4:32 am Peter

Any idea what market condition caused the negative returns using the Graham method for 2005-2006? What would cause value stocks based on the screen to tank so much the previous year, but not in the years before?
on 31 Jan 2007 at 2:19 pm focus

Can you do a Benjamin stock picks every month for the readers?
on 31 Jan 2007 at 6:31 pm StingyJoe

Hey Focus,

Yes, I will run the screen every month for the readers to review.

StingyJoe
on 06 Mar 2007 at 7:00 pm hexar

Hi StingyJoe,
I can’t find the field “Annual EPS Growth (5-yr avg)”. Only “Annual EPS Growth” is listed.

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