5 Stocks Benjamin Graham Would Have Loved

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Every now and then it pays to stop, sit back, and actually read what the old masters were saying at the end of their careers. Not the sanitized, cherry-picked quotes that get passed around on social media, but the real material. The interviews. The articles. The off-the-cuff remarks when they no longer had anything to prove and no reason to impress anyone.

If you do that with Benjamin Graham in the 1970s, what you find is not some mystical stock picking wizard dispensing clever tricks. You find a man who had seen just about everything that can happen in financial markets, and who had boiled it all down to something so simple that most people will dismiss it out of hand.

He gave you two ways to invest.

That was it. Two. Not 50 indicators. Not a macro model. Not a proprietary system with a trademark and a marketing budget.

Two approaches, both grounded in numbers, both built to survive human nature, and both designed to outperform the vast majority of investors who insist on making this business far more complicated than it needs to be.

The first approach is what I would call the "stop trying to be a hero" strategy.

Graham looked around at Wall Street after decades in the game and came to a very uncomfortable conclusion: most professionals were spending their time trying to do things that could not be done consistently.

They all thought they could do it. Most of them could not. The results spoke for themselves.

His solution was almost offensive in its simplicity.

Buy a diversified group of stocks that are cheap by objective standards, make sure the balance sheets are sound, make sure the companies have a record of earning money, and then leave them alone.

That is not a pitch you are going to hear on financial television.

There is no excitement there. There is no story. There is no genius required. Just a handful of measurable criteria. Low price relative to earnings. Low price relative to book value. Reasonable financial strength. Some evidence that the business actually makes money on a consistent basis. Then you buy a group of them, not one or two, but enough so that you are not depending on being right about any single name, and you let the arithmetic work over time.

What Graham understood, and what most investors still refuse to accept, is that this works precisely because it is boring.

Nobody wants to do it.

Investors would rather chase what is working right now. They would rather believe they have insight into the future. They would rather own the exciting story than the statistically cheap balance sheet. So they abandon discipline at exactly the moment discipline matters most. They pay too much when things look good and they refuse to buy when things look ugly.

Graham's first approach is designed to short circuit that behavior. You are not asking whether you like the story. You are asking whether the numbers meet your criteria. If they do, it goes in the portfolio. If they do not, it does not. Over time, that simple filter keeps you out of a lot of trouble and puts you in front of a lot of opportunities that others ignore.

It is not perfect. It was never meant to be. It is just consistently good enough to beat the average participant who is making decisions based on mood and narrative.

The second approach is where Graham reminds you that he still had a little bit of a contrarian streak left in him.

This is the bargain basement strategy. The stuff nobody wants. The companies that look a little rough around the edges. The ones trading at prices that make you uncomfortable because they are so obviously out of favor.

Here the emphasis is even more blunt. You are buying extreme cheapness. Stocks selling below book value. Sometimes below the value of the current assets on the balance sheet. Businesses that are not exciting, not growing rapidly, and not being featured on anyone's "top ideas" list.

If the first approach is boring, this one is downright ugly.

And that is exactly the point.

Graham knew that markets do not just misprice things a little bit. They overreact. They neglect entire groups of securities because they are inconvenient, unfamiliar, or simply uninteresting. Professional investors avoid them because they are too small, too illiquid, or too embarrassing to explain in a client meeting. Individual investors avoid them because they do not come with a compelling story.

That neglect creates opportunity.

But there is a catch, and this is where most people get it wrong. You cannot approach this as a stock picker trying to find the one hidden gem. That is not the game. Some of these companies will disappoint. Some will go nowhere. A few will work out very well. The edge comes from buying a group of them, at prices that already reflect a great deal of pessimism, and letting the winners more than offset the losers.

It is arithmetic again, not brilliance.

Graham was very clear about this. If you try to apply judgment and pick only the ones you think are "good," you will probably do worse than if you simply follow the rules and buy the basket.

Your opinions will get in the way. Your emotions will interfere. You will talk yourself out of the very situations that offer the greatest potential reward.

That is the thread that ties both approaches together.

Graham was not really teaching stock selection. He was teaching behavior.

He had come to believe that the average investor's biggest enemy was not the market. It was their own tendency to abandon discipline.

They would say they believed in value, but they would not buy when prices were low. They would say they were long term investors, but they would panic when volatility showed up.

They would say they wanted a process, but they would override it the moment it became uncomfortable.

So he designed approaches that did not require you to be right in the short term and did not depend on your ability to forecast the future.

You did not need to know what interest rates were going to do. You did not need to predict the next earnings cycle. You did not need to guess which industry would be in favor next year. You needed to apply a set of measurable standards and stick with them.

That is a much harder task than it sounds.

Because sticking with a process means looking wrong for periods of time. It means owning stocks that nobody is talking about. It means watching other people make money in things you do not own. It means buying when the headlines are negative and holding when the market is volatile.

There is no applause for that.

But that is where the edge is.

Graham understood something that the modern investment industry still struggles with. If a strategy works all the time, everyone will adopt it, and it will stop working. The very reason these simple, quantitative approaches continue to deliver results over long periods is that they go through stretches where they are ignored, ridiculed, or abandoned.

That is when they are most powerful.

When you strip away all the noise, what Graham handed us in those final interviews was not a set of tricks. It was a choice.

You can follow a disciplined, quantitative process that relies on valuation, balance sheets, and diversification, and accept that it will be boring and occasionally frustrating.

Or you can join the crowd, chase what is working, react to headlines, and convince yourself that this time you will get out before it turns.

Most people choose the second path. They always have.

Graham spent a lifetime watching how that ends.

The irony is that the simple path, the one built on a handful of measurable criteria and a refusal to deviate from them, is still sitting there, just as available today as it was in the 1970s.

It does not require brilliance. It does not require access. It does not require a forecast.

It requires discipline.

And as Graham knew, that is the one thing investors are always in short supply of.

We will talk more about how to use these approaches in all of our portfolios but for now here are five stocks that fit the "No Heroes" approach to long-term investing:

AllianceBernstein $AB ( ▲ 0.76% ) is exactly the kind of business that fits the "no heroes required" framework because it does not ask you to believe in anything heroic at all. It is a steady, fee-driven asset manager with a long operating history, real earnings power, and a habit of sending a meaningful portion of those earnings back to investors in the form of a generous distribution. The market will periodically fall in and out of love with asset managers depending on flows and sentiment, but the underlying math is simple.

You are buying a cash-generating franchise at a reasonable multiple with a high yield, and you do not need to predict the next hot asset class to make money. You just need assets to stick around and markets to do what they have always done over time, which is fluctuate and eventually grow.

Ennis $EBF ( ▲ 0.38% ) is about as far from a story stock as you can get, which is precisely why it belongs here. This is a small, unglamorous printing and business forms company operating in a niche most investors assume is in permanent decline. That assumption is what keeps the valuation grounded in reality. The company has a long record of profitability, conservative financial management, and consistent dividends.

It is not exciting. It is not supposed to be.

It is a cash flow business with modest growth expectations, and when you can buy that at a reasonable price with a solid balance sheet, you do not need a narrative to justify the investment. You just need the business to keep doing what it has been doing for years.

Gentex $GNTX ( ▲ 0.55% ) looks a little more modern on the surface with its exposure to automotive technology, but underneath it is still a classic Graham-style candidate. The company has a fortress balance sheet, consistent profitability, and a history of generating strong returns on capital without relying on excessive leverage.

It trades at a valuation that is not demanding relative to its earnings power, particularly when sentiment around the auto cycle turns negative. This is not a bet on the next breakthrough innovation. It is a bet that a well-run, financially sound manufacturer with a durable niche will continue to earn money and reward shareholders over time.

Home BancShares $HOMB ( ▲ 0.41% ) fits the framework in a way that would make any old-school bank investor nod in approval. This is a conservatively run regional bank with a strong track record of credit discipline, solid capital levels, and consistent profitability across cycles. The market will always worry about interest rates, credit quality, and the next economic slowdown, and those concerns will periodically push bank stocks to discounts that assume far worse outcomes than typically occur.

Buying a well managed bank at a reasonable multiple of earnings and book value, with a history of navigating tough environments, does not require a heroic forecast. It requires confidence in the balance sheet and patience with the cycle.

Cheniere Energy Partners $CQP ( ▲ 3.17% ) may sound more complex because of its connection to global LNG markets, but from a Graham perspective it is still a straightforward income-generating asset. The partnership owns critical infrastructure with long term contracts that produce steady cash flow, much of which is distributed to unitholders.

Energy headlines will swing wildly, and the geopolitical narrative will change by the week, but the underlying business is built on contracted revenue streams tied to essential energy exports. When you can buy that stream of cash flow at a reasonable price with a high yield, you do not need to predict the next move in natural gas prices or global politics. You need the contracts to hold and the infrastructure to keep operating, which is a far simpler proposition than most investors make it out to be.