Portfolios

Defensive Stock Lists

The following companies have passed the requirements of the defensive investor, which include:
1)  Adequate size of the enterprise; Market cap greater than $2 billion,
2)  Sufficiently strong financial condition; Current Ratio greater than 2,
3)  Earnings stability; Positive Net Income for the last 10 years,
4)  Dividend record; Dividend payments for the last 10 years,
5)  Earnings growth; Increase of one-third in EPS in the past 10 years using 3 year averages at the beginning and end of the period,
6)  Moderate Price/Earnings Ratio; PE Ratio less than 20
7)  Moderate Price/Assets Ratio; PB Ratio less than 2.5 or multiple of PB and PE less than 50.
*The company must pass at least 6 of the 7 tests in order to be suitable for the defensive investor.

Our requirements for the defensive investor are based on Benjamin Graham’s The Intelligent Investor, but have been modernized and updated.

After screening the Russell 3000 for all of the companies that pass the requirements of the defensive investor, we sort them to provide a starting point for research.  Here are the results:

15 companies trading at greatest discount to intrinsic value:

PGR PROGRESSIVE CORP
VLO VALERO ENERGY CORP
NI NISOURCE INC
NFB NORTH FORK BANCORP
STFC STATE AUTO FINANCIAL
ATG AGL RESOURCES INC
ASH ASHLAND INC
BAC BANK OF AMERICA CORP
WFC WELLS FARGO & CO
STZ CONSTELLATION BRANDS
ZION ZIONS BANCORPORATION
MNI MCCLATCHY COMPANY
TMA THORNBURG MORTGAGE
TOA TECHNICAL OLYMPIC
CB CHUBB CORP (THE)

15 companies with the lowest PE Ratio (calculated using Our Methods):

TOA TECHNICAL OLYMPIC
FBP FIRST BANCORP
PGR PROGRESSIVE CORP
SPF STANDARD PACIFIC
BZH BEAZER HOMES USA INC
PHM PULTE HOMES, INC.
HOV HOVNANIAN ENTERPRISE
KBH KB HOME
MTH MERITAGE HOMES CORP
CGI COMMERCE GROUP, INC.
LUK LEUCADIA NATIONAL
WHI W HOLDING COMPANY
MHO M/I HOMES, INC.
AET AETNA INC
MDC M.D.C. HOLDINGS, INC

15 companies with the highest Return on Invested Capital (ROIC) using Warren Buffet’s definitions of owner earnings and contributed capital:

RCII RENT-A-CENTER, INC.
DEBS DEB SHOPS, INC.
DLX DELUXE CORPORATION
HRB H&R BLOCK INC
PCU SOUTHERN COPPER CORP
NUE NUCOR CORPORATION
RYL RYLAND GROUP, INC
KCP COLE (KENNETH) PRODS
MDC M.D.C. HOLDINGS, INC
LIFE LIFELINE SYSTEMS INC
LEN LENNAR CORP
EASI ENGINEERED SUPPORT
TTC TORO COMPANY (THE)
EXPO EXPONENT, INC.
LIZ LIZ CLAIBORNE, INC.

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