r/valueinvesting
Graham Style Screen Resulted with 2 Stocks Passing (CSS & INGR)
Author highlights CCS and INGR as top Graham-style value picks, rejecting cheap Chinese ADRs like WB and TCOM due to VIE structure risks.
- Identified CCS and INGR as passing Graham's strict quantitative criteria with strong margins of safety.
- Highlighted consistent profitability and solid financial metrics for the selected value stocks.
- Homebuilder sector faces collapsing forward margins despite low trailing P/E ratios.
- Chinese ADRs carry severe structural risks due to VIE setups, offering zero asset protection.
I ran a screen applying Graham's Investor criteria over the market and only 2 passed the full screen.
The two survivors:
$CCS (Century Communities): P/E 12.4, P/B 0.62, current ratio 12.09, margin of safety +30% vs Graham Price. Affordable housing builder, clean audit, no going-concern flags.
$INGR (Ingredion): P/E 10.3, P/B 1.54, current ratio 2.66, 29-year dividend streak, ROIC 15.5% vs 10% internal target. B2B ingredient solutions. Not exciting but consistently profitable.
A few things I found notable this month:
The homebuilders ($CSS, $KBH, $LEN, $MTH) all looked compelling on trailing P/E but their forward guidance implies margins collapsing. Trailing P/E becomes almost meaningless when earnings are in free fall (it's a trap!).
Three Chinese ADRs ($FINV, $WB, $TCOM) passed every quantitative screen with P/Es under 8 but got hard rejections. VIE structures are a hard pass for me. Investors don't legally own the underlying business, so you get zero asset protection.
Cal-Maine ($CALM) had a P/E of 5.3 driven by abnormal egg prices during the HPAI outbreak. Normalize for a typical egg-price environment and the P/E jumps to around 13x, which fails the threshold.
What are people seeing in their own screens this month?
Nice job there! I stoped using screeners, and just picking "pre-processed" ideas from here and the VIC.
I'm always coming back to this idea, but I'm not sure it still worth it in this age where we all have access to them. What's your experience?
Appreciate it! The screener vs. pre-processed ideas debate is interesting.
My take is that screeners and curated ideas aren’t really competing. A screener is a filter, not a thesis. The screener tells you where to look, not what to think. The real work still happens after the screen!Reading the 10-K, understanding the business, forming a view on whether the margin of safety is real.
The VIC is excellent for ideas but you’re reading someone else’s conclusion. The risk is anchoring to their thesis before you’ve formed your own.
Where I find the screen valuable is precisely the ideas it surfaces that nobody is talking about. Ingredion passed this month. It’s a B2B food ingredients supplier with a 29-year dividend streak and ROIC of 15.5%. It was not a highly discussed stock but the screen found it because the numbers met the criteria.
The “is it worth it in the age of accessible screeners” question is interesting. I’d flip it: accessible screeners mean everyone has the same data. The edge is in the qualitative work that comes after, which most people skip. That’s the gap I’m trying to close.
What are you finding at VIC lately?
that's a good point! There is definitely hidden gem which because most of us use "standard" screeners, can be missed, and found only with well curated ones.
To be fair, it's been a really long while since I have found something worth for me from the VIC, but I'm afraid the problem might be in my analysis (too strict or myopic) , and to try to close this gap I'm just started posting my analysis here to get some feedback
INGR. Earnings have fallen. Have you any thoughts on future growth?
CALM is one I always think I should buy some of that. Cheap and good dividend. I keep forgetting.
I actually have an analysis piece I wrote on Medium!
You can read the whole piece below but the TLDR for your question it was a working capital build (receivables and inventory timing), not a deterioration in the underlying business.
https://medium.com/@grahamgrade/ingredion-boring-business-clean-balance-sheet-29-year-dividend-streak-b3a34caae483
Thanks, will read that. It's a good stock to look at. These boring ones often pay off.