Five Stocks Ben Graham Might Buy, If He Were Alive Today
Posted: August 18, 2025
August 11, 2025 — (Maple Hill Syndicate) – I wish I had known Benjamin Graham in person.
Graham was a hedge-fund manager, Columbia University professor, mentor to Warren Buffett, author and bon vivant. He’s widely considered the father of the value (bargain-hunting) school of investing.
Alas, I didn’t know Graham, who was born in 1894 and died in 1976. But he lives on in his books, and in the investment philosophies of dozens of money managers (including me).
Once a year in this column, I attempt to guess what stocks Graham would pick if he were alive today. The average return on my “Graham” recommendations, over 22 years, has been 15.1%.
That beats the 12.4% average return for the Standard & Poor’s 500 Total Return Index over the same years. Bear in mind that my column results are hypothetical and shouldn’t be confused with results I obtain for clients. Also, past performance doesn’t predict the future.
Graham’s Method
Graham’s stock-selection methods are set out in his books and other writings. For this column, I use a simplified version of his criteria. To qualify as a potential “Graham stock,” a company must have:
- Debt no more than 50% of corporate net worth.
- A stock price that is 12 times earnings or less.
- A stock price that is less than a company’ book value (corporate net worth per share).
Today very few stocks meet these stringent criteria. I’d like to draw your attention to five of them.
Mosaic
The Mosaic Co. (MOS), based in Tampa, Florida, makes fertilizer, especially potash fertilizer. Its sales fell 5% in the past year, but have averaged 7% growth over the past decade. The stock is cheap, selling for 11 times earnings and 82% of book value.
One reason it’s cheap is that a lot of potash is imported from Canada, and Canada is slated to face a 25% tariff under the Trump administration’s trade plan.
Bank OZK
From Little Rock, Arkansas, comes Bank OZK, a regional bank with big ambitions. A year ago, I included it among my Graham-inspired choices, and it rose 24.8%.
The rise surprised many people, since Bank OZK does a lot of commercial real-estate lending, including construction loans. Ever since Covid-19 drove many people out of office buildings five years ago, commercial real estate has been poison.
The loan portfolio’s make-up scares me a bit, but I have a lot of faith in the bank’s chief executive officer, George Gleason.
Meritage
Just under book value is Meritage Homes Corp. (MTH), a mid-sized homebuilding company with headquarters in Scottsdale, Arizona. It builds homes in ten states, most of them in the sun belt. I like that service territory as the South and West are gaining population.
Debt is only 36% of equity at Meritage. That should help the company navigate its way through the current downturn in home sales, which is caused mainly by high mortgage rates.
Seadrill
Sometimes investors love energy stocks, and sometimes they hate them. Seadrill Ltd. (SDRL), which does offshore drilling, is untimely. No one wants to drill under the ocean when oil fetches $60 a barrel.
So, Seadrill has lost money in eight of the past ten years. Its stock, down 25% this year, sells for less than it did a decade ago.
But if oil hits $80 or $90 a barrel, it would be a different story. I expect that to happen in the next three years, and I like this stock at its current valuation of less than six times recent earnings.
Nacco
Selling for only 67% of book value is Nacco Industries Inc. (NC). Based in Cleveland, Ohio, it’s a coal mining company that is barely covered by Wall Street analysts.
Nacco has shown a profit in 13 of the past 15 years, and had a good year last year. The stock sells for eight times recent earnings.
Last Year
The past year has been an unpleasant one for the value approach. So, it’s not surprising that my Graham-inspired picks from a year ago trailed the overall market. They rose 6.6% while the Standard & Poor’s 500 Total Return Index jumped 21.1%.
Two stocks — Unum Group (UNM) and Bank OZK (OZK) did well, returning 33% and 25% respectively. But G-III Apparel Group Ltd. (GIII) and HF Sinclair Corp. (DINO) had small losses, and Peabody Energy Corp. (BTU) shed 22% of its value.
In 22 years, my Graham stocks have beaten the index 14 times, and shown a profit 15 times.
Disclosure: I own Meritage Homes personally and for most of my clients.
John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts, and a syndicated columnist. His firm or clients may own or trade securities discussed in this column. He can be reached at jdorfman@dorfmanvalue.com.