Here’s a breakdown of the top ranked stock qualifying for the Enterprising Investor stock screen.
This screen was made popular by Benjamin Graham in his book, The Intelligent Investor.
Enterprising Investor Description
According to Graham, an enterprising investor buys from a list of common stocks “that can be identified as undervalued by logical and reasonably dependable standards.”
The screen finds stocks which are “rather similar to those we suggested for the defensive investor, but not so severe.”
Below is a breakdown of the requirements a stock must meet to qualify for the Enterprising Investor screen.
The first criteria is concerned with the stock’s price relative to recent earnings, and the next four are concerned with the company’s “past performance and current financial position.”
The last requirement values the stock based on the company’s net tangible assets.
- P/E (TTM) < 10
- Current Ratio > 1.5 AND Long-Term Debt < 110% of Net Current Assets
- Positive Earnings Streak ? 5 Years
- Dividends Per Share (TTM) > 0
- Net Income % Growth, 5 Year CAGR > 0
Once a stock meets the above requirements, its intrinsic value is calculated by multiplying net tangible assets by 120%.
Top Ranked Stock
Here is the stock with the lowest price to intrinsic value as found on The Stock Market Blueprint:
Kelly Services, Inc. (KELYA): Provides staffing solutions to professional and technical employees in the fields of education, legal, health care, and creative services.
- Price/Earnings (TTM): 6.58
- Current Ratio: 1.55
- Working Capital: $428 Million
- Long-Term Debt: $0
- Positive Earnings Streak: 5+ Years
- Dividends Paid (TTM): $0.25/share
- Net Income % Growth, 5 Year CAGR: 15.57%
- Price/Intrinsic Value: 66%
- Current Price: $22.31 (closing price on 1/19/16)
- Intrinsic Value: $33.81
Implementation
Graham states that the enterprising investor strategy finds companies “that are making a good showing, have a satisfactory past record, but appear to hold no charm for the public.” He says a group of these stocks “should offer good promise of satisfactory investment results.”
Build your own portfolio using the stock screens on The Stock Market Blueprint.
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