Ben Graham’s investment strategy finds potentially underpriced stocks by examining established companies with proven performance rather than risky ventures. Based on Benjamin Graham’s principles Validea’s model uses these specific criteria:
Operational Fundamentals
- Annual revenue must exceed $340 million
- Must show profitability for five consecutive years
- Excludes technology companies in favor of traditional industries
Financial Strength Requirements
- Current ratio greater than 2.0
- Net current assets must exceed long-term debt
Growth Criteria
- Earnings growth of at least 30% over a ten-year period
- Uses three-year earnings averages to smooth out temporary fluctuations
Valuation Thresholds
- Price-to-earnings ratio (based on three-year average earnings) must not exceed 15
- Combined P/E and price-to-book ratios must remain below 22
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This methodical approach reflects Graham’s emphasis on maintaining a margin of safety while helping investors identify financially sound companies available at reasonable prices.
Here are the top 10 stocks using Validea’s Benjamin Graham strategy for February 2025.
| Ticker | Company Name | Value Investor | Price | Market Cap ($mil) | PE Ratio | Price/ Sales | Relative Strength | Price/ Book | Price/ Cash Flow | Dividend Yield | Long-Term EPS Growth |
|---|---|---|---|---|---|---|---|---|---|---|---|
| BCC | BOISE CASCADE CO | 100 | $106.43 | $4,037 | 11.1 | 0.6 | 42 | 1.9 | 7.7 | 0.6% | 15.3% |
| BG | BUNGE GLOBAL SA | 100 | $74.27 | $9,950 | 9.2 | 0.2 | 39 | 1.0 | 6.0 | 3.6% | -5.3% |
| BZH | BEAZER HOMES USA INC | 100 | $23.77 | $742 | 6.1 | 0.3 | 40 | 0.6 | 5.4 | 0.0% | 11.4% |
| CRI | CARTER’S INC | 100 | $43.67 | $1,574 | 8.5 | 0.6 | 25 | 1.8 | 6.5 | 7.3% | 2.8% |
| NPSNY | NASPERS LTD (ADR) | 100 | $49.70 | $44,213 | 13.4 | 6.4 | 85 | 0.9 | 5.5 | 0.0% | 12.8% |
| NUE | NUCOR CORP | 100 | $136.08 | $31,953 | 10.3 | 0.1 | 33 | 1.6 | 3.6 | 0.0% | 10.2% |
| SCVL | SHOE CARNIVAL INC | 100 | $22.44 | $610 | 8.3 | 0.5 | 33 | 1.0 | 5.8 | 2.3% | 33.4% |
| SMP | STANDARD MOTOR PRODUCTS INC | 100 | $30.93 | $672 | 11.1 | 0.5 | 50 | 1.1 | 7.3 | 3.8% | -0.4% |
| STLD | STEEL DYNAMICS INC | 86 | $133.48 | $20,322 | 13.6 | 1.2 | 59 | 2.3 | 10.0 | 1.4% | 16.8% |
| SWBI | SMITH & WESSON BRANDS INC | 86 | $11.08 | $488 | 14.1 | 1.0 | 41 | 1.3 | 7.2 | 4.5% | -3.3% |
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