Benjamin Graham, widely recognized as value investing’s founding father, established a methodical framework for identifying undervalued stocks that continues to guide investors decades later, most notably his famous student Warren Buffett. Graham’s approach centers on discovering financially stable, established companies trading below their true worth, avoiding speculative ventures with uncertain futures.
Investment Philosophy
Graham advocated for investing in businesses with proven performance histories rather than companies built primarily on future promises. This conservative strategy emphasizes protecting invested capital by seeking a substantial “margin of safety” between market price and intrinsic value.
Validea’s Graham-Inspired Investment Strategy
Benjamin Graham, considered the father of value investing, created a systematic approach to finding undervalued stocks that still influences investors today, including his famous student Warren Buffett. Graham focused on identifying financially sound, established companies trading below their intrinsic value, while avoiding speculative investments with uncertain prospects.
Core Philosophy
Graham believed in investing in companies with proven track records rather than those promising future success. This conservative approach prioritizes capital preservation by seeking a significant “margin of safety” between market price and true value.
Validea’s Graham-Based Strategy
Validea developed a quantitative screening model based on Graham’s principles, evaluating companies across four key areas:
Business Fundamentals
- Size Requirement: Annual revenue exceeding $340 million to ensure stability
- Earnings Consistency: Positive earnings for 5 consecutive years
- Industry Focus: Preference for traditional industries over tech companies
Financial Strength
- Liquidity: Current ratio above 2.0
- Debt Management: Net current assets greater than long-term debt
Long-Term Growth
- Sustained Performance: Minimum 30% earnings growth over 10 years
- Smoothed Earnings: Uses 3-year earnings averages to reduce volatility
Value Metrics
- P/E Limit: Three-year average P/E ratio below 15
- Combined Valuation Check: P/E ratio plus price-to-book ratio cannot exceed 22
Discover how Validea’s models can help you identify high-quality, long-term investments, even in changing market conditions. Visit Validea.com to access in-depth stock analysis and tools designed to emulate proven investment principles. Take a Free Trial Today!
Here are the top 10 stocks using Validea’s Benjamin Graham strategy for May of 2025.
| Ticker | Company Name | Value Investor | Price | Market Cap ($mil) | PE Ratio | Price/ Sales | Relative Strength | Price/ Book | Price/ Cash Flow | Dividend Yield | Long-Term EPS Growth |
|---|---|---|---|---|---|---|---|---|---|---|---|
| BCC | BOISE CASCADE CO | 100 | $95.51 | $3,633 | 10.0 | 0.5 | 37 | 1.7 | 7.0 | 0.7% | 12.4% |
| BG | BUNGE GLOBAL SA | 100 | $80.91 | $10,839 | 10.0 | 0.2 | 41 | 1.1 | 6.6 | 3.3% | -5.4% |
| CRI | CARTER’S INC | 100 | $33.87 | $1,220 | 6.6 | 0.4 | 23 | 1.4 | 5.0 | 9.5% | -1.0% |
| IMKTA | INGLES MARKETS INC | 100 | $61.12 | $1,161 | 14.7 | 0.2 | 46 | 0.7 | 5.7 | 1.1% | -5.8% |
| MLR | MILLER INDUSTRIES INC | 100 | $41.48 | $475 | 7.6 | 0.4 | 46 | 1.2 | 6.1 | 1.8% | 20.1% |
| NUE | NUCOR CORP | 100 | $115.72 | $26,678 | 13.6 | 0.9 | 33 | 1.3 | 6.9 | 1.9% | 11.2% |
| SCVL | SHOE CARNIVAL INC | 100 | $17.99 | $489 | 6.7 | 0.4 | 26 | 0.8 | 4.7 | 3.0% | 12.0% |
| WB | WEIBO CORP (ADR) | 100 | $8.11 | $1,976 | 7.0 | 1.1 | 54 | 0.6 | 5.4 | 10.1% | -4.6% |
| WGO | WINNEBAGO INDUSTRIES INC | 86 | $32.74 | $918 | 0.3 | 26 | 0.8 | 16.6 | 3.9% | -17.7% | |
| UTHR | UNITED THERAPEUTICS CORP | 86 | $291.38 | $13,087 | 11.8 | 4.6 | 79 | 2.0 | 10.3 | 0.0% | 30.0% |
Further Research
