Dear Fellow Investor:

Would you have liked to buy Apple in August of 2010, when it was trading at 257 … just before it roared ahead 133% in nineteen months?

Would you have liked to buy Chipotle Mexican Grill in August of 2009, when it was trading at 94 … just before it roared ahead 69% in six months?

Would you have liked to buy Tractor Supply in May of 2009, when it was trading at 40 … just before it roared ahead 112% in 25 months?

I’m guessing you would!

And I’m guessing you’d especially appreciate that these big gains came from the world’s most reliable low-risk investing system, the one that provided the foundation for the investments of the legendary Warren Buffett.

Introducing Cabot Benjamin Graham Value Letter

As the premier value-based investment advisory, Cabot Benjamin Graham Value Letter promises its subscribers a compound annual return of 20% … just like that achieved by Ben Graham and Warren Buffett.

Warren Buffett is well-known today for his investing successes, but who was Ben Graham?

He was Warren’s teacher at Columbia University in 1950.

He systemized the entire process of evaluating companies, all with the goal of finding low-risk (or no-risk) investments that would appreciate over time.

He was the author of the bible of value investors everywhere, Security Analysis.

And it’s because of the wisdom in that bible that I was able to write the following recommendation of Apple in August 2010, in a Special Feature titled Undervalued Companies with Accelerating Earnings.

“Apple (AAPL) develops, manufactures and markets personal computers and consumer electronic products. The company’s revolutionary iPod digital music player, iTunes online music store and iPhone smartphone helped sales to increase 31% per year during the past five years, while earnings per share surged 90% per year during the same period. CEO Steve Jobs and company have a unique ability to identify what customers want, produce easy-to-use products and launch huge marketing campaigns to create demand. Apple recently introduced the iPad, a touch-screen mini-computer or ‘tablet,’ which can also run all of the applications found on the iPhone and iPod. The iPad helped sales soar 88% and EPS more than double in the latest quarter. In addition to gaining market share in the computer, smartphone and tablet sectors, I believe Apple will launch a new subscription-based TV service and a new multi-task mini-computer. I expect Apple’s earnings to grow at a rapid 24% pace during the next five years. At 14.7 times my one-year forward EPS estimate, AAPL shares are clearly undervalued.”

At the time, AAPL was trading at 257.

And even though I was wrong about the subscription-based TV service, AAPL did very well, soaring in the months that followed.

But because the business was growing so fast, Apple’s stock remained a great value!

And in early 2011, it passed the strict conditions of my regular investing system. So in February of 2011, with AAPL trading at 339, I recommended the stock again, writing this:

“Apple develops, manufactures and markets personal computers and consumer electronic products. The company’s revolutionary iPod digital music player, iTunes online music store and iPhone helped sales to increase 33% per year during the past five years, while earnings per share surged 70% per year during the same period. Apple’s iPad tablet-computer helped sales soar 70% and EPS catapult 75% in the quarter ended 12/31/10—well above my estimates. In addition to gaining market share in the computer, smartphone and tablet sectors, new product launches, such as the iPhone 4, will keep Apple ahead of the competition. Steve Jobs, CEO of Apple, is taking a leave of absence because of health problems. Mr. Jobs will be missed, but the company’s strong management team and innovative spirit will continue to thrive. I expect Apple’s earnings to grow at a rapid 24% pace during the next five years. At 14.7 times my one-year forward EPS estimate, shares are clearly undervalued. Shares will likely advance to my Minimum Sell Price of 653.73 within the next two to three years. AAPL is low risk.”

Since that recommendation, AAPL is up 73%.

And since my August 2010 recommendation, Apple is up 128% … while the S&P 500 has gained 27%. My subscribers have gained almost five times as much as the market … and they’re still holding!

Oh, and by the way, that Minimum Sell Price (what some analysts would call a Target Price) has been bumped up to 806, because earnings have exceeded most analysts’ expectations.

And it’s important to note that this Minimum Sell Price comes not from any love of Apple products or predictions of what the company will do next. This judgment comes solely from the crunching of Apple’s numbers.

So let’s step back and see where these all-powerful numbers come from.

It starts, as I said above, with Ben Graham, whose Security Analysis is every bit as valuable today as it was in 1934 when he published it.

The book has sold over a million copies. Warren Buffet says he’s read it at least four times. And it’s been my bible since I was introduced to it by my finance teacher Dr. Wilson Payne, who like Warren Buffet, was one of Ben Graham’s students.

In 1969, as a fresh-faced lad out of college, I collaborated with Dr. Payne to turn Graham’s formulas into computer code. And I’ve has been using the system ever since, in both my professional and private investing.

As a result, I’ve been able to reward my loyal subscribers with recommendations like this, for ACE. Limited, in December 2009.

“ACE, Limited (ACE), based in Bermuda, provides property and casualty insurance and reinsurance for a diverse group of individuals and commercial clients. The company also provides specialized insurance products, such as personal accident, supplemental health and life insurance, to individuals. Net premiums of $13 billion were generated from international clients in more than 140 countries.

“Financial results in 2009 have been bolstered by unusually low losses from catastrophes, but partially offset by higher investment losses. Low losses have led to higher policyholders’ surpluses throughout the industry. The excess surpluses have forced companies to lower policy prices to attract new customers. Lower prices have weakened some of ACE’s competitors. I believe ACE will be able to gain market share from competitors and increase EPS by 5% in 2010. ACE avoided toxic asset investments and maintains a strong balance sheet. Its dividend has been increased every year during the past 15 years and now provides a better than average 2.5% yield. The balance sheet is strong, and the stock is undervalued. I believe ACE shares will increase to my Minimum Sell Price within one to two years.”

At the time, ACE was trading at 48.

And less than two years later, on October 28, 2011, I advised selling ACE, writing, “ACE, Limited reached its Minimum Sell Price of 73.76 late Thursday and should now be sold. ACE’s price to current earnings ratio has risen to 11.1 times, which is high. The stock price has risen 49.7% since I first recommended it in the December 2009 Cabot Benjamin Graham Value Letter, compared to an increase of 10.4% for the Standard & Poor’s 500 Index during the same period. I advise selling ACE now.”

By investing in ACE when I told them to, my subscribers earned almost five times more than conservative investors holding the S&P 500.

And it’s all thanks to Ben Graham’s formulas … with a little help from computers.

Now, Ben Graham didn’t use computers … but he only analyzed one company at a time. Thanks to computers, I’m able to track the market’s 1,700 best stocks, and thus stay aware at all times of the market’s best values.

This is not a casual undertaking. Every month, I track 44 (!) separate items that size up thousands of companies using four separate sets of factors: QUALITY, VALUE, GROWTH and TECHNICAL.

QUALITY encompasses measures like Current Ratio, Earnings Stability and Price Growth Stability.

VALUE tracks items like P/E ratio, Historical Price/Book Value relative to Current Price/Book Value, and Historical Price/Dividend ratio versus Current Price/Dividend Ratio.

GROWTH looks at things like five- and 10-year Historical Revenue Growth Trends, Quarterly Earnings Acceleration and five-year Projected Cash Flow.

TECHNICAL measures things like Relative Strength, Price Stability and Industry Strength.

And there are 32 more items!

But you don't need to worry about those details, because I do all the work and present the results, telling you in plain English what to buy and why. For every stock, I give you specific Maximum Buy Prices, as well as Minimum Sell Prices (i.e., target prices), and I update them in every issue.

As a result, you can worry less and enjoy investing more, just like this happy subscriber:

The fact that my system allows you to worry less and enjoy investing more is due in no small part to Ben Graham’s original system, which incorporated the concept of Margin of Safety. In brief, Margin of Safety is the result of value. When you buy well below a stock’s true value, you have the comfort of a wide Margin of Safety. As the stock advances over time, that margin shrinks. Finally, when the margin is razor-thin, you sell and move the proceeds into a new, undervalued stock.

For example:

In February 2011, I recommended Ulta Salon Cosmetics & Fragrance (ULTA), writing, “Ulta Salon is a beauty retailer that provides one-stop shopping for salon products and salon services in the U.S. The company offers over 21,000 beauty products organized by category in open, self-service displays to encourage customers to touch, test and learn. Ulta offers full-service salons and a range of hair care products in all of its 389 stores. Same-store sales for the seven weeks ended January 1, 2011 increased an impressive 9.5%. Shares sell at a high price to earnings ratio of 29.4, but are well worth the expectations for 25% EPS growth during the next several years. BUY.

At the time, the stock was trading at 36. Six months later, when my subscribers sold, it had gained a solid 30.5% … while the S&P 500 had actually lost 8% …

… providing a perfect illustration of how the Ben Graham system works in all markets. As a result, I don’t worry about what the market is doing. I know my stocks have that Margin of Safety, and I know eventually I’ll be selling them for profits.

The Best Wealth Advisory Ever? You Decide.

What makes Cabot Benjamin Graham Value Letter different from—and in my opinion, superior to—other investment advisories?

Like Ben Graham, I believe in a Margin of Safety—buying companies that are cheap relative to their intrinsic value. Using Graham’s criteria, I figure out the optimum “buy” price for you.

Like Benjamin Graham, I believe in research. To achieve returns of at least 20% a year, I screen my database of more than 1,700 value stocks. You’ll get only companies with solid balance sheets and track records of success.

Like Benjamin Graham, I believe that the secret to building wealth during economic downturns is to buy low and stay fully invested.

As my grandfather used to say, “You won’t catch a fish if your line’s not in the water.”

It’s worth noting that not every recommendation will be a home run. There isn’t a single wealth advisory in the world with a perfect batting average and Cabot Benjamin Graham Value Letter is no exception.

But when we suffer the occasional loss, it tends to be small … thanks to the built-in Margin of Safety. And our winners more than make up for those small losses.

Here are some of last year’s winners, alongside the gains made by the S&P 500 at the same time:

Company	Gain	S&P 500 Gain	Holding Time
Potash Corp.	28.1%	-2.4%	6.1 months
Ulta Salon	30.5%	-11.1%	6 months
Priceline	40.4%	5.0%	6 months
Omnicare	48.3%	23.8%	18 months
Marathon Oil Corp.	55%	11.1%	6 months
Chipotle Mexican Grill	68.9%	17.4%	6 months
Netflix	94.9%	17.4%	6 months
Altera	94.4%	24.6%	10 months
Tractor Supply	111.7%	24.9%	17 months
Lululemon Athletica	172.1%	12.5%	15 months

If you had invested $10,000 in the S&P at each of these times, your gains would have come to roughly $12,320 (excluding fees and commissions).

But if you had invested $10,000 in each of the low-risk stocks recommended above in Cabot Benjamin Graham Value Letter, your profit would be $74,430 … six times as large!

Which raises the question … why would you own the S&P 500 when you could invest in stocks with big upside potential like these?

Now, you probably noticed that many of these stocks are not household names … and that’s typical. The best bargains are typically found in less-traveled corners of the market (Apple was the exception.)

But just because a name is new to you doesn’t mean it has no value. Whether it’s a fast-growing young company like Lululemon (which is actually Canadian) or a big old war-horse like Marathon Oil, the stock’s true value is revealed by crunching the numbers … just as Ben Graham prescribed.

And if you follow the numbers, and you hold patiently, the result is profits!

Speaking of profits, consider Lululemon, mentioned above.

In the April 2010 issue of Cabot Benjamin Graham Value Letter, I wrote, “Lululemon Athletica (LULU), founded in Vancouver, BC, makes athletic clothing for yoga, dancing, running and other active endeavors. The company sells women’s pants, shorts, tops and jackets in 106 company-owned and 13 franchised stores in Canada, the U.S., Australia and Hong Kong. Lululemon’s sales increased 25% and EPS soared 34% during the 12 months ended 1/31/10. I expect similar increases during the next 12 months and beyond. The share price, as measured by P/E, is expensive, but the company’s exciting growth potential provides an advantageous investment opportunity. Buy.”

Subscribers who followed that advice locked in a massive 172.1% gain when they sold in July 2011. (They also avoided the big plunge that followed.)

And where did they redeploy those profits?

Ideally, in stocks like Bed Bath and Beyond (BBBY) or Tim Horton’s (THI), another Canadian company.

Ten months later, Tim Horton’s was up 12% while Bed Bath and Beyond was up 20%.

Solid companies like those are the kind many readers appreciate, like Dr. Terry J. van der Werff of Hoover, Alabama.

And here’s another oldie-but-goodie.

In September 2009, I recommended Delphi Financial (DFG), writing, “Delphi Financial offers a diverse array of employee group insurance to customers in all 50 states and Canada. Insurance products include group life, short and long term disability, special accident, excess workers compensation, and dental insurance. The company’s asset accumulation division offers fixed annuity products. Delphi sells to small- to medium-sized companies and allows employees to choose the type and amount of benefits. Delphi’s earnings declined in 2008 because of lower investment income and slower demand by companies who were downsizing payrolls and benefits. EPS has begun to rebound in 2009, however, as evidenced by the 44% jump during the six months ended 6/30/09. Sales increased 4% during the same period. Higher investment income and new products will provide EPS growth of 22% during the next 12 months. The significant earnings rebound that I foresee is not reflected in the stock price. DFG shares are clearly undervalued at 7.7 times last 12-month EPS (earnings per share) and sell at less than book value. I expect DFG shares to increase to our Minimum Sell Price of 42.87 within one to two years. The dividend provides a solid 1.8% yield.”

This one took a little longer than usual to pay off, but it paid off big-time …

And on December 21, 2011, I was able to write the following:

“Delphi Financial Group 'A' (DFG: 43.90) will be acquired by Tokio Marine Holdings of Tokyo. The purchase price is $43.875 cash per share. The deal is expected to close before June 30, 2012. DFG shareholders will receive an additional $1.00 special dividend when the transaction closes, making the deal worth $44.875 per share to shareholders. My Minimum Sell Price, by the way, is 45.22. I recommend holding your DFG shares to the end (before June 30) so that you can receive the $1.00 special dividend. I believe the offer is fair, because the resulting price-to-book value ratio is 1.48, and the current price-to-earnings ratio is 12.7. Delphi's stock price has risen 96.8% since I first recommended the stock in the September 2009 Cabot Benjamin Graham Value Letter, compared to an increase of 18.4% for the Standard & Poor's 500 Index during the same period. I advise holding DFG until you receive your 43.875 cash per share plus the $1.00 dividend.”

Once again, the patient long-term investor in Ben Graham stocks beats the market … by a factor of more than 5!

And subscribers like R. Beaton appreciate that.

But it’s not all old manufacturers.

The system works equally well with fast-growing technology companies.

I already discussed the system’s success with Apple.

Well, here’s another, a chipmaker named Altera.

I first recommended the stock in August 2010, writing, “Altera (ALTR) is among the biggest and fastest-growing programmable logic device (PLD) players. PLDs are chips that can be programmed to do different tasks, and are used in TVs, jets and many other products. The PLD market is one of the fastest-growing chip sectors. Strong demand for high-performance chips is being fueled by consumer desires for new electronic gadgets and by corporations upgrading their computer systems. Altera has a sound balance sheet with lots of cash, which allows the company to spend an abundant amount on research to stay ahead of the competition. I expect brisk growth in the coming years.”

At the time, ALTR was trading at 28. Its dividend yield was just 0.9%, but the company’s 1-year forward growth was expected to be 35.2%!

And in May of 2011, I was able to write this:

“Altera (ALTR) reached its Minimum Sell Price of 45.08 on April 20. ALTR was first recommended in the August 2010 Letter and gained 62.3% since then compared to a gain of 18.5% for the S&P 500. Sell.”

Six months later, the chip-maker’s stock was down 33%!

J. McKeown of W. Lebanon, New Hampshire was one reader who appreciated that!

Coincidentally, the same day I recommended selling Altera, I also recommended selling Omnicare (OCR), taking a gain of 48.3% while the S&P 500 had advanced 23.8%.

When numerous stocks hit their Minimum Sell Prices at the same time, I know the market is high, and a lot of these stocks will be lower in the months ahead. So I wasn’t surprised to see Omnicare down 38% at a point of extreme selling just five months later. Someday, we may buy it back again!

But only if Ben Graham’s system tells us to.

Here’s another example.

In May 2009, I recommended that my subscribers buy Cash America (CSH), writing, “Cash America International owns and operates pawn and check-cashing facilities in 1,004 locations in 21 states. The company offers pawn loans, cash advances and check-cashing services. In addition, Cash America is the majority owner of 127 pawnshops in Mexico where rapid expansion is expected. The company’s business tends to flourish during periods of economic weakness. My forecast for a sharp economic downturn followed by a very slow recovery will provide adequate opportunities for Cash America during the next several years. I expect revenue and EPS growth to accelerate during the next 12 months. EPS will likely increase 16%. CSH shares have declined 50% during the past year, which is unwarranted because the company will prosper during the current economic malaise. CSH shares are undervalued at 9.0 times latest 12-month earnings per share (EPS). I believe CSH shares will recover to my Minimum Sell Price within one to three years. CSH’s balance sheet is strong with loan losses at low levels. The dividend provides a small 0.6% yield. BUY.”

At the time, CSH was trading at 23.70

And two-and-a-half years later, I recommended that my subscribers sell CSH, writing, “Cash America reached its Minimum Sell Price of 62.29 today and should now be sold. During the past three years, the company has racked up impressive sales and earnings gains, which have driven CSH's stock price to new all-time highs.

“Future sales and earnings prospects continue to look rosy, but there are a few clouds on the horizon. Large U.S. banks are beginning to offer short-term loans to potential borrowers who might otherwise use CSH's loan services. Also, state governments have passed new laws to limit the fees and interest rates on cash advances and short-term loans.

“Cash America's current P/E ratio has risen to 15.7, which is high. The dividend yield of 0.2% is small. CSH's price has risen a whopping 160% since we first recommended the stock in the May 2009 Cabot Benjamin Graham Value Letter, compared to an increase of 33% for the Standard & Poor's 500 Index during the same period. I advise booking your profit in CSH now.”

By investing in CSH when I told them to, my subscribers did almost five times better than conservative investors holding the S&P 500.

Furthermore, four months later, CSH was trading at 42, down 33%, proving the value of selling according to Ben Graham’s valuations.

And that’s something readers like M. Glenn really appreciate.

Summing up, Cabot Benjamin Graham Value Letter follows an ultra-safe strategy that has generated an annualized return of 20% every year for more than 80 years through every kind of market.

I’d like you to be a subscriber.

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So how about it? Are you ready to shoot for better-than-market returns?

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• 12 months of the best value-based investment advice on Wall Street in Cabot Benjamin Graham Value Letter.
• Clear, specific Buy instructions. When it’s time to sell, you’ll get a Special Bulletin by email to lock in your profits.
• New, carefully selected stock recommendations every month that meet Benjamin Graham’s proven criteria.
• My personal analysis of small-cap stocks, high-yielding stocks, REITs and other investments to boost returns and reduce risk.
• Personal replies to your emailed questions directly from me, not a customer service rep.
• Independent advice. Since we began offering investment analysis in 1970, we at Cabot strictly refuse to accept any compensation for any stock we recommend. You’re guaranteed to get 100% unbiased direction.
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Sincerely,

J. Royden Ward

Editor of Cabot Benjamin Graham Value Letter

P.S. Don't forget about our satisfaction guarantee: Try the Cabot Benjamin Graham Value Letter for 60 days— two full months. If you decide it’s not for you, let us know. We’ll gladly reimburse you every penny. Or cancel anytime after 60 days and get a refund on the balance of your subscription. The issues you received and your free bonus report are yours to keep. click here to get started today!