Is Buffett's mentor's stock selection rule still effective? Analyzing 5 consumer stocks

Benjamin Graham is Warren Buffett’s teacher. He has a classic stock selection method: low P/B, low P/E, low debt, steady growth. This approach is over 80 years old, but recent backtests show that using it to select consumer stocks still has some value.

Reviewed 5 candidate stocks:

NUS (Beauty and skincare company) – 86 points
A one-stop shop for beauty, nutrition, and medical devices, selling to 50 countries. Graham score is 86%, indicating this stock still aligns with his selection criteria. The downside is that its long-term EPS growth data is somewhat weak.

JBSS (Nut snack foods) – 86 points
The company behind brands like Fisher and Squirrel. All metrics pass the test, with the only major flaw being that its price is relatively high compared to net assets.

BG (Bunge Limited) – 86 points
A global leader in agriculture and oils, supplying raw materials for animal feed, bakeries, and biofuels. Financials are healthy, but short-term liquidity is a bit tight.

MNST (Monster Energy Drink) – 71 points
The leader in energy drinks, with rapid growth but overvalued. Both P/E and P/B are above Graham’s thresholds, making it less attractive according to his principles.

FDP (Fresh produce company) – 71 points
The producer of DEL MONTE brand, involved in the global fruit and vegetable supply chain. Its high valuation results in a lower score.

Core insight: Graham’s low valuation strategy still works today, but only if you can find good companies that the market has overlooked. Popular consumer stocks have already become too expensive.