I want to follow Graham advice and find stocks that have
1. Price / Avg earning of last 7 years =< 25
2. Price / Avg earning of last 1 year =< 20
3. Book value of common stocks / total capitalization, including bank
debt >= 1/2
4. Years of continuous dividend payments >= 10 years
How can I find companies meeting such criteria and how can I find such
information about a specific company? E.g., right now MSFT shows P/E ~
13 over earning of the last 1 year. How can I get the P/E for MSFT
over avg earning of the last 7 years?
#2 and #3 are easy to find on sites like Yahoo! Finance.
Mergent's list of dividend achievers will almost give you #4 - Mergent's
lists the companies that have had at least 10 years of dividends with no
dividend decreases. I think they have an online subscription service,
but you can probably find the list in print at your local library.
#1 may be the most difficult, I don't know of a place where you can get
that directly. However, you can figure this out for yourself from data
in Value Line which also has an online subscription, but is also likely
available in print at your local library. The print version will be a
bit tedious if you hope to screen stocks quickly, however. For
something close, the National Association of Investment Clubs used to
allow you to screen companies on average 10 year P/E ratios on their
website for a small subscription fee, but I don't know if this is still
the case. At some point they changed their name, the original site is
now here: http://legacy.betterinvesting.org /, their new site does not
appear to be functional (www.betterinvesting.org).
Good luck and let us know if you find other interesting resources,
william dot trice at ngc dot com
Will gave you a great advice with a list of great possibilities. I
want to caution you against blindly relying on screens too much. Very
many people, including those managing large amounts of "other people's
money", are running similar screens, often buying mechanically,
competing for stocks whose prices appear low in those screens. Some
are described in fancy terms as "130/30 enhanced return hedge funds"
or some such. The result of this competition is that it may no longer
be attractive to buy these "low PE, low P/B" stocks without further
The concept of "value investing" that suggests to buy a dollar of
earnings at a big discount, goes far beyond mechanical screens and
involves attempts to get understanding of the future of possible
I am not implying that your intention was to mechanically apply these
filters, only to caution against doing so.
As regards screening and Ben Graham - parameters were 'buy' points.
Now is as good a time as any to 'screen' but good companies are not
going to stay below those parameters. The obvious "trick" to investing
is plainly obvious and self-defining: look for companies with solid
businesses run by solid people. Most of Graham is qualitative
analysis. Read Buffett's piece on See's Candies.
When you have a handful of companies you like, follow the news, and
get a bit more knowledge. Then wait for the market to hand you low
PE's (low prices, really) on a silver platter. One 'easy idea' for a
screen in these times is simply companies that have increased their
dividends in the past year. Then check out the business.
I prefer to look for younger companies with established business but
with huge growth potential. Then I apply Graham, Dodd, & Cottle's
logic and analysis, and I follow the companies' sales and earnings and
public information regarding their markets and business.
Value Line gives some good historical information on stocks. It costs
a bit and, AFIK, isn't available over the Web. Check your local
Book value can be misleading because it can contain considerable
goodwill and intangible assets, so be sure to look at tangible book
value which isn't disclosed by most screeners. Tangible book value is
always less than book value to best of my knowledge.
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