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November, 2002


For this issue, I began by looking for low price to book stocks, seeking those with book value at least 150% of the current price. I screened the results for those with relatively low total debt to total equity and a dividend payout ratio (if the company paid a dividend) of .5 or below.

I reduced the list further by seeking only those stocks with a price to earnings ratio of 12 or below and, finally, by sifting out those with a price of less than $5 (since generally those are not marginable, and they are often less traded or followed).

The following assets met all the criteria and deserve consideration as genuine Benjamin Graham value plus safety bargains:

AMREP CorpAXR$8.0010.80.0N.A..560.23
Blair Corp.BL$
CPAC, Inc.CPAK$5.509.65.149.2%.620.18
Tweeter Home
Universal Stainless
and Alloy

Besides their low price to book ratios, some of these assets have additional factors in their favor. For instance, Blair Corp. is rated "A" (highest) by Charles Schwab for year-ahead performance. "Value Line" also includes it among its recent "Bargain Basement" screen stocks, with a price to net working capital ratio below one.

All of the cited assets are micro-cap. or small-cap., which in the long run have tended to outperform large-cap. stocks.

CPAC, Inc., has a dividend more than 2/3 the yield of the average Aaa (or AAA) corporate bond (another Benjamin Graham value criterion).

While past performance is no guarantee of future returns, over many decades Graham and his associates found that the compound average annual appreciation of such stocks, held generally until their price to value was one or above, was 15% or better.


Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)

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