value stocks. Benjamin Graham

[selkirk]

There was a recent artilce in the Cdn. Moneysaver by Norman Rothery.

He overall liked the revised edition of The inteligent Investor, in which Zweig provides some footnotes to the orginal.

He has every year given out a few selections based on a value basis, in the same model of Benjamin Graham.

note:uses stock screener at MSN.com, but there are dozen of them out there.

Benjamin Grahams criteria for the defensive investor

1. PE ratio less than 15
2. P/Book less than 1.5
3. book value over 0
4. current raito over 2
5. earnings growth of 33% over 10 years
6. uniterupted dividends over 20 years
7. some earnings in each of the past 10 years.
8. annual revenue of more than $100million (1950)

Screening criteria used to approximate Graham rules (note: if you use the orginal as listed above you often do not get any stocks)

1. PE ratio less than 15
2. P/Book less than 1.5
3. book value over 0.01
4. current raito over 2
5. annual EPS growth (5yr. avg) more than 2.9186%
6. 5 year dividend growth more than 0%
7. 5 year PE low more than .01
8. 1 year revenue more than $400 million

here are some past results (sept. 28, 2004 closing prices were used in the calculations)

Stock
2000 Graham Stocks 12/12/2000
AIR + 3.8%
HVT + 76.1
LZB + 4.7
RLC + 82%
RS +62.4
TG + 14.1
THO +431.6%
WNC +246.2%
WSO +186.1
average gain 123%
SP 500 -14.8%

2001 (10/29/2001)

CTX +170.2%
DTC +57.4%
HVT +36.8%
MDC holdings MDC +261.7%
PHM +261.5%
average gain = +157.5%
SP 500 +8.1%

2002 (10/27/2002)

CTX +145.5%
PHM +164.6%
DHI +149.1%
WGOV +78%
MDC +137%
SPF +124.5%
SEB +178.3%
UFPI +82.1%
HVI +47.6%
WSO +105.2%

average gain +121.2%
SP 500 +27.4%

2003 (10/27/2003)
PHM +64%
AMn +.4%

average gain +32.3%
SP 500 +9.4%

2004 (Sept. 28, 2004)/ Nov 30, 2004

KWD $36.66 $35.01
SEB $570 $754
SKYW $14.37 $19.20
STTX $25.72 $29.08
TTI $31 $39.25



it looks like the 2004 selections are off to another good year. Norman Rothery provides a few words of caution in the article that should be passed along.

1. value stocks have had a good run, especially over this run, they have years where they are not in favour. so the next five years the results may not be as good.

2. only a few stocks, in 2003 for instance 2 stocks, you would not put your whole portfolio in only a handfull of stocks.

3. he also suggest that the stocks selected still fit into the model.


still giving the results an interesting way to find value stocks. Will run some models through a stock screener in Jan/Feb and see how they fare over the course of the year.

thanks
selkirk

 

[DOGS THAT BARK]

Thanks Kirk

 

[selkirk]

here is an update, will have to see how they fare. of coarse they done well in the past, low pe, yield, and low to no debt are not bad companies to invest in over time.

DTB I wonder if a stock screener can do this with asia stocks (emerging markets). if the results would be similar.

In the Jan issue of cdn. moneysaver he listed the picks using the formula above.

Dec 1, 2004
Stingy stocks for 2005

share price pe yield
Lousiana pacific LPX 26.97 4.7 1.6%
Rebook RBK 39.05 14 .8%
Sanp on SNA $31.96 24.5 3.2%
Nucor NUE $52.29 10.5 1%


the current prices of these stocks are lpx $25.97, Rbk $43.80, SNA $31.96, NUE $52.09.
should also be noted that there are some reasons they have done well in the past. value stocks have done well, also the number of companies are limited. he only found 4 this year.

may be a worthwhile to use as a guide, in some cases.

thanks
selkirk

 

[DOGS THAT BARK]

Sure is interesting as well as was your dividend thread.
Been reading where India should do well as China if not better in emerging markets-but I know little about that country so prob won't dip in there unless recommendation from another such as yourself.

 

[selkirk]

DTB I am watching a bank called ICICI. they trade in NY ADR under the symbol IBN. they yield 2.30%. and seem to be showing good growth.

the banking sector seems to be very competitive (they are the third largest). they are following a model like ING another world large bank. by going on the internet.

in Canada they have some branches and offer internet and telephone banking they will offer better rates than most bank do not have to pay for as many branches.

another area they look to grow is by more increased trade through US, Canada to India. they would like to capture some of this growing business.

do not have a position yet, will post when I buy some. there are also products that track the index, still looking at those. will get another thread tracking some of these puchases. would not make these a large part of the portfolio.

those dividend stocks performed well over the five years and even longer. I have accounts that I trade but still have a DRIP/SPP portfolio of stocks, that has done well.

good way to build up a portfolio.

thanks
selkirk