31 Small Cap Company - Ideal Graham's Quant Criteria
And 3 of my favorites that you should consider digging deeper in.
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When we think of Benjamin Graham, we picture deep value company: companies with solid hard assets, plenty of cash, and a company price the market has unfairly ignored. When you find one, the payoff can be exceptional. The focus here is squarely on the balance sheet and on securing a deep margin of safety.
But those kinds of opportunities are rare today.
Fortunately, Graham didn’t stop there. He also wrote about a different kind of value company, one suited for the enterprising investor. This investor may ease up a bit on the margin of safety, provided the business shows financial strength in other ways. Valuation still matters, of course, but the lens shifts toward the income statement and a deeper understanding of the business itself.
I recently ran Graham’s Enterprising Investor screen and found 31 small-cap companies that fit this mold.
First, a little about me:
I’m Shailesh Kumar, and I write Astute Investor’s Calculus on Substack, where I dig deep into small-cap value companies, constructing portfolios with the Kelly Criterion to offer long-term value investors the ultimate advantage—a trifecta of potential:
High-performing stocks strategically chosen in the top-performing asset class, small-cap value,
Precision-optimized allocations that seek to maximize your portfolio’s performance, and
A mathematically balanced approach that reduces volatility, so while price may fluctuate, your portfolio remains steady.
If you’re intrigued by a calculated approach to investing that combines performance with stability, subscribe to Astute Investor’s Calculus and get fresh, actionable ideas delivered straight to you.
Please note: I am not a financial advisor and this is not financial advice. You can lose money investing in something you do not understand so please do your own due diligence.
To see how this plays out in today’s market, I ran the screen using Graham’s enterprising investor criteria focusing on profitability, conservative financials, and attractive valuations. Specifically, I looked for companies that met the following conditions:
Earnings Stability: Positive earnings in each of the past 5 years
Moderate Debt: Long-term debt less than 110% of net current assets
Current Ratio: At least 1.5
Earnings Growth: Earnings per share is higher than 5 years ago
Reasonable Valuation: Price-to-Earnings (P/E) ratio is lowest 30% of the sector and Price-to-Book (P/B) ratio is less than 2
Existing Dividend: The company pays some dividend to denote strength in cash flow and shareholder friendliness
Moderate Size: Market capitalization under $2 billion but above $30 million
This screen yielded 31 small-cap companies that deserve a closer look.
Here’s the full interactive table of results. After the table, I’ll walk you through three companies that stood out to me, along with a few thoughts on why they might be worth your time.
Tap or click the image to view the full table
Looking at the screening criteria, it’s clear that every company in this table represents a financially strong company. Each has delivered solid profitability over the past five years, trades at a reasonable or cheap valuation, and pays a dividend—which adds an extra layer of reassurance.
You’d likely be on solid footing with any of these names.
But as any disciplined value investor knows, the numbers only tell part of the story. Before putting your hard-earned capital to work, it’s worth digging deeper. The metrics may look good on the surface, but you still need to understand the underlying business, its competitive moat, the industry landscape, and the quality of the management team.
Here are three companies that stood out to me from the screen:
EPC 0.00%↑ Edgewell Personal Care
Formerly known as Energizer Holdings, Edgewell owns a suite of well-known consumer brands including Schick, Wilkinson Sword, Playtex, Carefree, Banana Boat, and Hawaiian Tropic. These are household names with a degree of brand moat, even if they aren't category leaders.
This company trades at a forward P/E of 9.1, Price/Book of 1.0, and Price/Sales of 0.7, making it meaningfully undervalued. I estimate the margin of safety at around 36%.
While not flashy, this is a steady business with staying power. I expect it to continue performing well.
ANDE 0.00%↑ Andersons
This is a behind-the-scenes agricultural powerhouse, focused on the storage, distribution, and trade of commodities. It’s a critical part of the U.S. food supply chain.
The numbers are compelling: a forward P/E of 8.8 and a PEG ratio of just 0.5, suggesting strong growth at a bargain price. Margin of safety is around 37%.
Agriculture may be a commodity business, but in a world of rising trade tensions and food insecurity, it’s poised to benefit. And even if that tailwind doesn’t materialize, you’re still buying a well-run, undervalued essential business with a healthy dividend.
SCS 0.00%↑ Steelcase
Steelcase is a premium office furniture company whose brands include AMQ, Coalesse, and Designtex. While office trends have shifted, the return-to-office movement is gaining ground, and that bodes well for demand.
This company trades at a forward P/E of 7.7 and a Price/Book of 1.2, with a dividend yield of 4%. Return on equity sits at 12.3%, a solid mark for a company in a cyclical industry.
With a 37% margin of safety by my estimates, Steelcase offers both value and a catalyst as workplaces invest in high-quality office environments.
Each of these companies reflects what Graham had in mind for the enterprising investor: financial strength, attractive valuation, and a business that can hold its own through economic cycles. The screen does the heavy lifting up front, but the real edge comes from doing the work after. If you're willing to dig deeper, separate signal from noise, and stay patient, you’ll find that the market still offers opportunities that would make Ben Graham proud.
Keep watching the signals, not the noise.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always do your own research and consider your financial situation before making investment decisions.
Remember what goes up must come down (eventually)
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