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The Defensive Value Investor by John Kingham

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Chapter 5. Low Valuation

“The price paid for each [company] should be reasonable in relation to its average earnings for the last five years or longer.”

Benjamin Graham

Using the tools we’ve looked at so far, relatively defensive companies should be easy to find. Just pick a company, check for a ten-year unbroken dividend record and calculate its growth rate, growth quality, profitability and so on. If it has consistent inflation-beating growth, powered by high levels of profitability and little debt, it could be worth investing in.

However, I have said nothing about price or value, and the title of this book is The Defensive Value Investor, not The Defensive Investor.

It’s no good finding a fantastically defensive company if it currently trades ...

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