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MoneySaver Articles  Active at Passive Prices  Unbundling ETFs 2008  5 Stingy Stocks for 2008  5 Graham Stocks for 2008  Is your index too active?  Graham's Simple Way  Canadian Graham Stocks  5 Stingy Stocks for 2007  8 Graham Stocks for 2007  Top SPPs  The Simple Way  A hole in your IPO?  Monkey Business  8 Stingy Stocks for 2006  Graham Stock Gainers  Blue-Chip Blues  Are Dividends Safe?  SPPs for 2005  Graham's Simplest Way  Selling Graham Stocks  RRSP Money Market Funds  Stingy Stocks for 2005  High Performance Graham  Intelligent Indexing  Unbundling Canadian ETFs  A history of yield  A Dynamic Duo  Canadian Graham Stock  Dividends at Risk  Thrifty Value Stocks  Stocks in Short Supply  The New Dividend  Hunting Goodwill  SPPs for 2003  RRSP: don't panic  Desirable Dividends  Stingy Selections 2003  10 Graham Picks  Growth Eh?  Timing Disaster  Dangerous Diversification  The Coffee Can Portfolio  Down with the dogs  Stingy Selections  Frugal Funds  Graham Revisited  Just Spend It  Ticker Temptation  Stock Mortality  Focus on Fees  SPPs for the Long Term  Seeking Solid Stocks  Relative Strength  The VR Approach  The Irrational Investor  Value Investing  Eye on PI MoneySense Articles  Income 2008  Small stocks, big profits  Cdn Top 200 2008  US Top 500 2008  Value that sizzles  So simple it works  Income 100  No assembly required  Investing by the book  Cdn Top 200 2007  US Top 500 2007  Invest like the masters  A simple way to get rich  Top Trusts 2006  Stocks for cannibals  Car bites dogs  Cdn Top 200 2006  US Top 1000 2006  So easy, so profitable  Top Trusts 2005  Dogs of the Dow  Top 200 2005  Money for nothing  Yield of dreams  Return of the master Advisor's Edge Articles  Passive Rebundling  Doing the math Norm Speaks	Seeking Solid Stocks In early December I found myself with a bit of extra cash to invest. So, I quickly thought of the many features that I wanted in a stock and set off to the Internet to find them. My first task was to find a good, no fee, stock screening utility. After all, I like it when computers do the bulk of the work. It's even better when they do it for free. After hopping around web pages, I visited Microsoft's www.msn.com and took a second look at their stock screener. http://moneycentral.msn.com/articles/common/finderpro.asp Many moons ago I visited this site, but was turned off. You see, to use the msn.com screener you must first download a small program. This time, I took the leap and downloaded the utility. A few moments later I was quite impressed and began my search. I started by looking for stocks that met Graham's defensive investor criteria as outlined in The Intelligent Investor (See Figure 1). However, the msn.com stock screener only has 5 years worth of data. Undaunted, I approximated and out came nine stocks: AIR, HVT, LZB, RLC, RS, TG, THO, WNC and WSO (See Figures 2 & 3). Figure 1: Benjamin Graham's Criteria for the Defensive Investor P/E Ratio less than 15. P/Book Ratio less than 1.5. Book Value over 0. Current Ratio over 2. Earnings growth of 33% over 10 years. Uninterrupted dividends over 20 years. Some earnings in each of the past 10 years. Revenue of more than $100 Million (1950). Source: The Intelligent Investor (pages 184-185). Figure 2: Screening criteria used to approximate Graham's rules P/E Ratio <= 15 P/Book Ratio <= 1.5 Book Value >= 0.01 Current Ratio >= 2 5 Yr Earnings Growth >= 15% 5 Yr Dividend Growth >= 0% 5 Yr P/E Low >= 0.01 1 Yr Revenue >= $400 Million   Being of a suspicious nature, I immediately wondered if this list was too good to be true. After all, I'm painfully aware that it can take some time before an announced dividend cut makes it into the average database. The same goes for earnings declines, revenue shortfalls and all manner of other calamities. The first thing I checked for were precipitous price declines since they are a good sign that extra digging is required. As it happens, none of the nine stocks showed sudden price plummets but many had slowly declined. For instance, THO had dropped from a year high near $30 down to $20. A recent news release explained the problem; third quarter earnings were down 12.5%. Similarly, AIR had fallen from $28.50 to $12. Why? Earnings had declined by 70% from the previous year. The moral of the story is that a good stock screener is just a start. But it's a very handy start. I've now happily played with the msn.com screener for many hours and have been impressed with the robustness and depth of its data. My only major disappointment is the lack of information on Canadian companies. If you've come across a good, free, Canadian stock screener please let me know. I'm still looking for a few more solid stocks. Some Canadian Screeners Globeinvestor.com MSN.ca Figure 3: Results of the Stock Screen Symbol Company Name P/E P/B Book Current Ratio 5-Year EPS Growth 5-Yr DPS Growth 5-Yr P/E Low Revenue ($M) AIR AAR CORP. 11.9 0.95 12.63 3.00 19.97% 1.27% 7.6 920 HVT Haverty Furniture 7.5 1.20 8.29 3.10 20.58% 5.24% 7.7 674 LZB La-Z-Boy Inc. 10.0 1.42 11.23 3.10 18.90% 6.21% 8.1 2,077 RLC Rollins Truck 5.7 1.18 6.80 2.30 19.67% 15.82% 3.6 720 RS Reliance Steel & Aluminum Co. 11.3 1.50 17.30 3.40 18.54% 26.12% 5.2 1,689 TG Tredegar Corp. 5.7 1.06 14.69 2.00 27.08% 28.05% 5.9 901 THO Thor Industries 6.9 1.22 16.29 2.60 26.21% 1.50% 6.4 877 WNC Wabash National Corp. 5.5 0.44 17.26 2.80 15.31% 8.74% 6.8 1,415 WSO Watsco, Inc. 10.3 0.94 11.86 3.30 18.52% 6.31% 9.8 1,352 Source: msn.com before the close on December 12 2000. Date: Feb 2001
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