Benjamin Graham Value Stocks — 7-Rule Classic Bargain Filter on NYSE & NASDAQ
Low P/E, price below 1.5× book value, low debt, current ratio above 2, dividend yield — Graham's original framework applied to modern US markets.
About This Screen
Benjamin Graham's value investing framework — codified in Security Analysis (1934) and The Intelligent Investor (1949) — established the intellectual foundation for systematic equity analysis. His central principle: buy stocks at a significant margin of safety below intrinsic value, with adequate earnings, low debt, sufficient liquidity, and a dividend record. His criteria for a defensive investor remain the most rigorous set of simultaneously-applied value filters ever published.
WHAT THIS SCREEN FINDS: US NYSE and NASDAQ stocks passing all core Graham criteria simultaneously: P/E between 1 and 15, Price-to-Book below 1.5, Debt-to-Equity below 1, Current Ratio above 2, and a positive dividend yield. Market cap above $500M ensures institutional-quality size and basic liquidity.
KEY METRICS EXPLAINED: P/B below 1.5 provides asset-value margin of safety — Graham's core principle that you should never pay more than 1.5× the tangible assets backing a share. Current Ratio above 2 means short-term liabilities can be covered twice over from current assets. D/E below 1 reflects Graham's insistence on conservative capital structures. A positive dividend yield signals earnings stability and management discipline with shareholder capital.
WHY INVESTORS USE IT: The Graham screen surfaces companies the market has overlooked or temporarily depressed — real tangible value selling at a discount. It minimizes downside risk through the asset-value floor, earnings cheapness filter, and financial strength requirements. These are the 'defensive investor' picks Graham designed for those who want safety-first equity exposure with a clear margin of safety.
BENEFITS: Strong downside protection from the P/B filter creates a natural floor on losses. Low P/E limits overpayment risk. Current ratio requirement ensures financial safety in downturns. Dividend yield confirms earnings reality — not paper profits. Historically, stocks passing all Graham criteria simultaneously have shown strong risk-adjusted returns over 5+ year horizons.
RISKS AND LIMITATIONS: Graham's framework naturally underweights fast-growing technology businesses where book value is minimal relative to earnings power. Pure net-net bargains are extremely rare in modern US markets. Some 'passing' companies carry heavily goodwill-inflated book values — always check tangible book value separately. The framework is defensive by design and will underperform in momentum-driven bull markets.
HOW TO ANALYZE STOCKS FROM THIS SCREEN: Calculate tangible book value (total book value minus goodwill and intangibles) and confirm P/Tangible BV is still below 1.5. Verify the dividend has been paid consistently for multiple years, not just currently outstanding. Read the most recent 10-K for any off-balance-sheet liabilities or contingencies. Confirm operating cash flow is positive and growing year over year.
COMMON MISTAKES: Accepting reported book value without stripping goodwill and intangibles. Ignoring payout ratio — a dividend covered by declining earnings is a warning signal, not a safety signal. Buying Graham stocks without sector context — utilities accept higher D/E structurally. Holding positions too long after significant fundamental deterioration. Treating the screen as a final answer rather than a starting filter requiring individual company research.
Related screens: Graham Number Stocks (deeper intrinsic value analysis), Strong Balance Sheet (additional financial safety criteria), Free Cash Flow Champions (earnings quality verification), Below Book Value (net-asset-value deep discount).
Frequently Asked Questions
What are the Benjamin Graham value investing criteria?
Graham's classic criteria: P/E below 15, P/B below 1.5, D/E below 1, current ratio above 2, positive dividend yield, earnings stability, and some earnings growth. This screen applies the core criteria simultaneously to find genuine Graham-style bargains in today's US markets. Results are sorted by P/E ascending — cheapest on earnings first.
Which sectors appear most on Graham value screens?
Financials, utilities, basic materials, energy, and industrials — where book value reflects real tangible assets and earnings are relatively stable. Technology and software rarely qualify because their book values are minimal relative to earnings power and P/E ratios reflect justified growth expectations. The Graham framework was specifically designed for asset-backed businesses.
Is pure Graham value investing still effective today?
Mixed results in modern markets dominated by intangible assets. Pure net-net bargains are rare. Most practitioners use Graham's criteria as a quality-and-safety filter to identify conservative, solid businesses rather than a complete standalone strategy. The current ratio, debt, and P/B filters specifically reduce balance sheet risk and avoid value traps.
What is the Graham margin of safety concept?
Graham's margin of safety is the gap between a stock's current price and its calculated intrinsic value. He argued for buying only when the discount was substantial — typically 33–50% below intrinsic value. The P/B below 1.5 and P/E below 15 filters in this screen are his quantitative proxies for a margin of safety in everyday stock selection.
Why does Graham require a current ratio above 2?
A current ratio of 2 means current assets are twice current liabilities — the company can cover all short-term obligations and still have assets left over. Graham considered this the minimum liquidity standard for a safe investment. Companies below this threshold risk financial distress if business conditions deteriorate even modestly, particularly in recessions.
What is tangible book value and why does it matter for Graham screens?
Tangible book value = Total Book Value minus Goodwill and Intangible Assets. Graham developed his criteria when most assets were physical and balance sheet values were reliable. Modern companies often carry large goodwill balances from acquisitions that inflate reported book value. Checking the P/Tangible BV ratio gives a more conservative and accurate asset-backing measure.
How does the Graham screen differ from a simple low P/E filter?
A low P/E alone can catch companies cheap because they're deteriorating — classic value traps. Graham's simultaneous requirements for P/B below 1.5, current ratio above 2, and D/E below 1 specifically screen out financially weak or leveraged businesses. You get cheap AND financially sound, not just cheap.
What P/E range does Graham consider acceptable for a defensive investor?
Graham specified P/E should not exceed 15 for a defensive investor. He also noted that P/E × P/B should not exceed 22.5 — the basis for the Graham Number formula. A P/E of 15 combined with a P/B of 1.5 exactly hits this product. Lower P/E ratios (below 10) provide additional margin of safety.
Do Graham value stocks pay dividends?
Yes — dividend yield above zero is one of Graham's explicit criteria. He required a sustained dividend record for defensive investor stocks. A current positive dividend yield on this screen is a minimum bar; check the payment history for genuine consistency over multiple years. A very recent first dividend is less reassuring than 20 years of uninterrupted payments.
How often should I rebalance a Graham value portfolio?
Graham recommended annual reviews. Sell a position when it appreciates to 50% above your purchase price or after holding for 2–3 years if the appreciation hasn't materialized. His framework is not buy-and-hold forever — it's disciplined rotation into cheap assets and systematic exit from those that have revalued to fair value.
Results 3 stocks matched
Refreshed daily · Sorted by Market Cap (High → Low)
| S.No. | Company | P/B | Book Value | Current Ratio | D/E | Price | P/E | Mkt Cap | Div Yld % | ROCE % | ROE % | 52W High | 52W Low |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1. | Centerra Gold Inc. | 1.48 | $10.31 | 2.39 | 0.91 | $15.27 | 5.31 | $4.66 B | 0.01% | 12.52% | 32.46% | $28.97 | $9.25 |
| 2. | SandRidge Energy, Inc. | 1.07 | $13.87 | 2.17 | 0.32 | $14.81 | 7.23 | $547.87 M | 3.13% | 9.42% | 15.09% | $18.45 | $9.89 |
| 3. | Insteel Industries Inc. | 1.49 | $19.13 | 3.58 | 0.99 | $28.44 | 13.21 | $561.62 M | 0.42% | 13.72% | 11.72% | $41.64 | $24.35 |