The Intelligent Investor is one of the most recommended books to read for prospective investors. In this book, Benjamin Graham, the father of value investing describes how he would invest in stocks by two different profiles of investors – defensive and enterprising.
The “ defensive” investor is an approach for investors who are unable to dedicate much time to the process or inexperienced with investing.
And the “enterprising” investor for those with greater market experience and more time for portfolio management.
Graham felt defensive investors should focus their investments to the shares of large, prominent, and conservatively financed companies with long track record of profitable operations.
While enterprising investors can expand their universe of stocks outside of the “large and conservative” companies as they are more experience and have more time to do in-depth research. Despite its name, enterprising investors are not only limited to growth plays but bargain issues and special situations as well.
In other words, this person is willing to put in the extra effort necessary to obtain a better than average return on investment.
So what stocks would an enterprising investor buy? Broadly, they are as follows:
- Revenue greater than $100mm ($500mm adjusted for inflation)
- Strong financial position ( Current ratio greater than 1.5)
- Earnings stability (positive EPS in the last 5 years)
- Dividend track record (Consistent dividends paid in the last 5 years)
- Earnings growth (Earnings growth in the past 5 years)
- Price to earnings (less than 10)
- Price to book (less than 1.2)
So which SGX-listed stock fits this criteria?
I’ve listed 3 stocks here in this article: https://theasiancontrarian.com/2019/01/23/if-benjamin-graham-is-alive-today-which-sgx-listed-stock-would-he-buy/