The Money Man Behind Rick Santorum: Who Is Foster S. Friess?
Savings Experiment: Snow RemovalIn his Validea newsletter, John Reese assesses stocks using specialized screens based on the stated criteria of legendary stock market investors.
One such screen -- which has resulted in his best-performing model portfolio -- is based on the value-oriented investment strategy of Benjamin Graham.
Here, he looks at oil services firm Tidewater (TDW), which scores 100% on his Graham-style model.
"Tidewater provides offshore supply vessels and marine support services to the offshore energy industry through the operation of offshore marine service vessels.
"As of March 31, 2008, the Company had a total of 430 vessels, of which 10 were operated through joint ventures, 61 were stacked and 11 vessels withdrawn from service.
"The company provides services supporting all phases of offshore exploration, development and production, including towing, transporting supplies and personnel, pipe laying, cable laying and three-dimensional (3-D) seismic work.
"According to the Graham screen, the current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. TDW's current ratio of 2.78 passes the test.
"For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities).
"Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for TDW is $275.0 million, while the net current assets are $439.2 million. TDW passes this test.
"Under Graham's criteria, companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years.
"Companies with this type of growth tend to be financially secure and have proven themselves over time. TDW's EPS growth over that period of 212.9% passes the EPS growth test.
"The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be 'moderate', which this methodology states is not greater than 15.
"Stocks with moderate P/Es are more defensive by nature. TDW's P/E of 6.70 (using the 3 year PE) passes this test.
"Finally, according to Graham, the Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. TDW's Price/Book ratio is 1.00, while the P/E is 6.70. TDW passes the Price/Book test."
Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
