Ben Graham Would Buy Pfizer, Tiffany, Grant’s Says

By Eric Martin

Dec. 10 (Bloomberg) -- Pfizer Inc. and Tiffany & Co. are among eight stocks that Benjamin Graham, the father of value investing and Warren Buffett’s mentor, would buy, Grant’s Interest Rate Observer said.

Cooper Industries Inc., Nucor Corp., Cintas Corp., Archer Daniels Midland Co., Molex Inc. and RadioShack Corp. also meet the seven criteria Graham presented in 1973 for stocks that a “defensive investors might buy with confidence,” according to the latest issue of Grant’s, which was released today.

“That there are as many as eight is a notable fact,” the newsletter said. “In March 2003, near what would prove to be the bottom of the post-Nasdaq washout, Grant’s could identify only two that met the grade.”

Graham favored companies that have “adequate size;” current assets that exceed liabilities by two times; 10 straight years of profit; 20 years of uninterrupted dividends; 10 years of earnings growth exceeding 33 percent; a price-to-earnings ratio of less than 15; and a price-to-book ratio that’s less than 1.5, according to Grant’s, an investment newsletter founded by James Grant in 1983.

“Security Analysis,” published in 1934, provided a road map for value investors including Buffett, the chairman of Berkshire Hathaway Inc.

An equal-weighted index of the eight companies Grant’s identified has surged 32 percent since Nov. 20, the day the Standard & Poor’s 500 Index dropped to an 11-year low.

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.