Saturday, September 03, 2011

8 Value Tips that Benjamin Graham might have loved using today

Fundamental Analysis of shares was the concept brought to  light by the Guru of all investors Benjamin Graham. In his book “Intelligent Investor” has worked as a reference book of all investors since decades. In this book the concept of buying shares of low price earning ratios, low price to book value ratio, maintaining margin of safety in investments were brought forward.

Today we would like to list down few stocks that Ben Graham would have preferred to buy in todays market. But before listing down these shares lets see some concept of Ben Graham which he might have also used to evaluate the stocks:

(1) The Current Ratio of the share shall be at least 1.5 or lesser
(2) If working capital is 100, long term debt shall not be more than 10.
3) EPS must be growing at a rate at least which beats inflation
(4) Dividend paying companies shall be preferred over others (rate of rise in proportion to rate of increse of EPS)
(5) Intrinsic Value of share is higher than its market price.
(6) Price Earning Ratio has single digit figures
(7) Earning Yield of share is higher than the risk free rate of the market
(8) EPS growth shall be stable over a period of last five years.
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