Introduction
The Graham Enterprising Investor screen focuses on the valuation as well as the companies that exhibit solid financial strength. Additionally, the company shall be highly liquid and should pay a dividend. This filters out the low quality companies and we are presented with stocks that may be undervalued but have good quality operations.
In this screen, we focused on the small cap stocks that satisfy the Graham Enterprising Investor screen criteria.
Screen Details
This screen looks for small cap stocks between $30 million and $2 billion in market capitalization with good valuation and quality operations. The quality of the operation can be judged by a continuous profitability, presence of a dividend and good liquidity as exhibited by the current ratio:
- Dividend Yield > 0
- Current Ratio > 1.5
- Long Term Debt/(Current Assets - Current Liabilities) between 0 and 1.1
- EPS > 0 for each of the previous 5 years
- EPS now > EPS 5 years ago
- P/E Ratio in the lowest 30% of the sector
The Screen Results
Stock | Company | Dividend Yield | P/E Ratio | Current Ratio |
|---|---|---|---|---|
ACCO | ACCO Brands | 2.9% | 9.5 | 1.6 |
ACU | Acme United | 2.1% | 15.0 | 4.6 |
ALCO | Alico | 0.7% | 11.4 | 1.9 |
ALOT | AstroNova | 1.9% | 17.1 | 2.4 |
AVD | American Vanguard | 0.5% | 25.1 | 2.5 |
BBGI | Beasley Broadcast Group | 6.9% | 7.4 | 1.7 |
BGS | B&G Foods | 11.9% | 5.9 | 3.5 |
CIX | Compx Intl | 1.9% | 12.2 | 6.4 |
CRWS | Crown Crafts | 4.7% | 11.9 | 3.9 |
CTO | Consolidated-Tomoka Land | 0.8% | 10.7 | 2.5 |
CTRN | Citi Trends | 1.7% | 15.2 | 1.5 |
EBIX | Ebix | 0.9% | 11.9 | 1.5 |
EML | Eastern Co | 1.6% | 13.3 | 3.2 |
HNNA | Hennessy Advisors | 4.9% | 7.3 | 3.0 |
HOFT | Hooker Furniture | 2.6% | 9.2 | 3.8 |
HURC | Hurco Companies | 1.4% | 9.8 | 4.2 |
HVT | Haverty Furniture Cos | 4.1% | 16.3 | 1.6 |
IMKTA | Ingles Markets | 1.6% | 10.9 | 2.1 |
JOUT | Johnson Outdoors | 1.1% | 14.8 | 3.4 |
KELYA | Kelly Services | 1.4% | 11.9 | 1.5 |
MATW | Matthews International | 2.3% | 18.6 | 2.0 |
MLR | Miller Industries | 2.0% | 11.0 | 2.1 |
MOV | Movado Group | 3.3% | 8.6 | 3.6 |
MRTN | Marten Transport | 0.6% | 18.8 | 1.7 |
MTX | Minerals Technologies | 0.4% | 12.8 | 2.2 |
NATH | Nathan's Famous | 1.8% | 15.1 | 6.7 |
NCMI | National Cinemedia | 10.5% | 15.1 | 1.8 |
NEWT | Newtek Business Services | 12.4% | 12.1 | 3.6 |
NHC | National Healthcare | 2.4% | 18.3 | 1.9 |
NPK | National Presto | 1.1% | 18.3 | 7.3 |
ODC | Oil-Dri Corp of America | 2.9% | 21.0 | 2.7 |
PLPC | Preformed Line Products | 1.1% | 15.8 | 2.8 |
RECN | Resources Connection | 3.7% | 15.8 | 2.1 |
SCVL | Shoe Carnival | 0.9% | 14.1 | 2.2 |
SGC | Superior Group | 3.0% | 14.8 | 3.2 |
UVV | Universal | 6.0% | 14.4 | 4.7 |
VLGEA | Village Super Market | 3.6% | 15.6 | 1.5 |
VSEC | VSE | 0.9% | 11.8 | 2.4 |
WD | Walker & Dunlop | 1.9% | 11.6 | 5.9 |
WEYS | Weyco Group | 4.1% | 10.9 | 3.6 |
WIRE | Encore Wire | 0.1% | 16.1 | 7.5 |
WMK | Weis Markets | 3.2% | 16.8 | 1.7 |
WNC | Wabash National | 2.1% | 10.5 | 1.9 |
WSTG | Wayside Technology Group | 4.9% | 9.6 | 1.7 |
Notes and Observations
As mentioned in the earlier screens, I am avoiding the financials, home builders and hotel/resort stocks. Additionally, the commodities and metals market may be on the cyclical downturn right now. That removes HNNA, NEWT, and WD from consideration. BGS, HOFT, KELYA and MOV are already on our further review list.
- ACCO: Cheap by most measures. Current ratio is borderline. Other borderline Current Ratio is for WSTG, WEYS, ACCO, CTRN, HNNA and Kelya
- ACU: Solid financials, a Piotroski F-Score of 7. Add to the watchlist.
- CRWS: Financials look great. Stock may be cheap. Will research.
- EML: Financials are great. Add to the watchlist for further research
- HURC: Add to the watchlist
Ending Note
We will look into ACU, CRWS, EML and HURC in greater detail. At this time of the economic cycle, it is critical to stay conservative and avoid any stock that is less than undervalued and solidly run.
