Monday, September 24, 2012

4 Graham-Buffett style stocks

by J. Royden Ward, editor Cabot Benjamin Graham Value Letter

J. Royden WardBenjamin Graham has been recognized for decades as the father of value investing. Warren Buffett was a student of Graham at Columbia University and later worked for Mr. Graham for several years.

For our latest special report, I combine Warren Buffett’s and Ben Graham’s criteria for choosing stocks; here, we look at four high-quality companies that fit our criteria.

To find these Graham-Buffett style investment opportunities, I looked for stocks with:
  1. Free cash flow more than $20 million.
  2. Net profit margin more than 15%.
  3. Return on equity more than 15%.
  4. Discounted cash flow value higher than current price.
  5. Market capitalization more than $1 billion.
  6. Standard & Poor’s rating of B+ or better.
  7. Positive earnings growth during the past five years with no deficits.
  8. Dividends currently paid.
These stocks sell at sensible prices, offer reasonable appreciation potential and provide solid dividends. I am confident these high-quality stocks will fare very well during the next six months.(more)

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