Value Stocks, May 2026: 5,875 Tickers Through a Benjamin Graham Screen, and Only Two Survivors

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This month the GrahamGrade screen ran across 5,875 tickers and returned two clean passes: Century Communities (NYSE: CCS) and Ingredion (NYSE: INGR). That is not a typo or a problem with the tool, and it is not unusual. A genuine Benjamin Graham filter is built to reject. What the two survivors share is the thing most cheap-looking stocks lack: earnings that do not depend on a commodity price sitting at a cyclical high, and a balance sheet strong enough that a bad year is survivable rather than terminal. Everything else in the universe either failed a hard gate or earned a WATCH, which is the rating reserved for names that are interesting but not yet investable on the numbers.

One caveat worth stating up front, because it shapes how the Ingredion pass should be read: a quantitative screen is a snapshot. It captures a company on the day the data was pulled. It does not capture what management agreed to do three weeks later. More on that below.

How 5,875 Names Become a Shortlist

The mechanical layer applies Graham's Enterprising Investor criteria, not the stricter Defensive standard. The most consequential difference is the current-ratio threshold: a passing name must clear a current ratio of 1.5, not the 2.0 a Defensive screen would demand. The filter also wants a defensible earnings multiple, a manageable debt load, positive and reasonably stable earnings, and a price that is not detached from book value. Names that clear the math then go through a qualitative pass that reads the most recent annual filing — the 10-K for domestic issuers and the 20-F for foreign private issuers — looking for anything that makes the clean numbers misleading. Some structures fail this layer automatically regardless of how cheap they screen.

Century Communities: A Fortress Balance Sheet Priced for a Rate Shock

Century Communities passes on the strength of its balance sheet and a still-modest multiple, and it carries one obvious macro risk that the price appears to be discounting. The homebuilder trades around 12 times trailing earnings on roughly $4.86 in trailing EPS, with a current ratio above six and debt-to-equity near 0.56. For a cyclical builder, that liquidity and leverage profile is the entire point: it is what lets the company keep buying land and starting homes when the cycle turns against it.

The qualitative case rests on where Century sits in the market. It builds at entry-level and first-move-up price points, the part of the housing market with the deepest structural undersupply and the most durable demand. That is the resilience argument. The risk argument is the same fact viewed from the other side. Entry-level buyers are the most rate-sensitive cohort there is, and Century leans on mortgage-rate buydowns to keep monthly payments affordable. Those buydowns are a real cost, and they compress an already thin net margin that runs near 3.6 percent. Return on invested capital sits below 4 percent, which is a weak spot and the reason this is a value-and-balance-sheet story.

The company estimates 10,000 to 11,000 home deliveries and $3.6 to $4.1 billion in revenue for 2026. If mortgage rates grind lower into the spring selling season, the buydown drag eases and the thin margin has room to widen. If rates stay sticky or move higher, volume and margin compress together. The balance sheet is what makes that a risk worth underwriting rather than a reason to stay away.

Ingredion: Cheap and High-Return, But a $3.6 Billion Deal Just Changed the Math

Ingredion is the higher-quality of the two passes, and it is also the clearer illustration of why the screen is a starting point rather than the end. On the May data, the ingredient maker looked close to ideal for this framework: a trailing P/E under 10, a current ratio of 2.66, return on invested capital above 15 percent, and a dividend payout ratio near 29 percent. The dividend record stretches back to the company's late-1990s spinoff, with roughly 7 percent annual increases over the past decade and no material cuts, which signals the kind of cash-generative stability Graham looked for. There is also a governance footnote worth carrying: a November 2023 Clean Air Act consent decree covering particulate and VOC exceedances at the company's Indianapolis corn wet-milling plant, settled for about $8 million in penalties and controls. Against $7.2 billion in revenue that is financially immaterial, but it is the sort of operational flag the qualitative layer is meant to surface.

Then the math changed. On June 8, after the May screen had already run, Ingredion announced a recommended all-cash acquisition of Tate & Lyle for about £2.7 billion, or roughly $3.6 billion, with completion expected in the second half of 2027. The strategic logic is defensible, shifting the business from commodity starches and sweeteners toward higher-margin specialty ingredients. The screening implication is that an all-cash deal of this size changes the very balance sheet that made the name pass. The clean current ratio and modest leverage are a point-in-time picture that does not yet reflect the financing of a multibillion-dollar acquisition or the integration risk that runs through 2027.

The released terms let us put numbers on that picture. Ingredion is funding the cash offer with existing cash, new debt, and a fully committed $4.225 billion 364-day bridge facility, and it expects pro forma net leverage of about 3.0 times net debt to adjusted EBITDA at completion, against something under 1 times today, with a stated plan to work back toward 2.5 times within roughly 18 months while holding an investment-grade rating. Translated into the screen's own language, the criteria most at risk are the ones that defined the pass. The debt gate breaks first, with leverage stepping up close to fourfold and debt-to-equity tripling from 0.46. The 1.5 current-ratio gate is next, since acquisition financing and consolidated working capital pull the current 2.66 toward the threshold rather than away from it. The price-to-book anchor weakens too, as a premium near 60 percent loads the balance sheet with goodwill and thins tangible equity. Earnings stability and the multiple itself should hold. What changes is balance-sheet quality, which was most of what earned the rating in the first place.

This is the case the qualitative layer exists to catch. A stock can clear every quantitative gate in May and warrant a fresh look in June because of a corporate action the ratios cannot see. The pass stands as of the screen date. The position deserves a re-review once the post-deal balance sheet is visible, which is exactly how a disciplined screen should treat a transformational transaction.

Three Cheap Cyclicals That Are Cheap for a Reason

The most useful names on the WATCH list this month share a single trap, and seeing it once makes it easy to spot again. Global Ship Lease (NYSE: GSL), Cal-Maine Foods (NASDAQ: CALM), and Teekay Tankers (NYSE: TNK) all screen statistically cheap on trailing earnings. The problem is that those trailing earnings sit at or near a cyclical peak, which makes a low trailing P/E a measurement of the top of the cycle rather than a margin of safety. What keeps all three on WATCH rather than in the reject pile is that each carries a genuinely strong current ratio, so the downside is a compression in earnings rather than a solvency question.

Global Ship Lease trades near 3.6 times trailing earnings with a dividend yielding around 6 percent and a contracted-revenue backlog of roughly $2.05 billion over a 2.6-year weighted duration, with forward charter cover locked for all of 2026 and most of 2027. That backlog is real and it is the strongest case for the name. The offsets are an aging fleet, with a TEU-weighted average age near 17.9 years, and containership charter rates that are elevated by post-2021 standards. The backlog cushions a downturn; it does not repeal the cycle.

Cal-Maine is the cleanest demonstration of the trap. The largest U.S. egg producer carries a fortress balance sheet, with a current ratio near 8 and more cash than debt, but its earnings are normalizing hard off avian-influenza-driven price spikes. Third-quarter fiscal 2026 EPS came in at $1.07 against $10.42 a year earlier, with revenue down 53 percent. Because the dividend is set as a share of net income, the headline yield will fall as earnings fall, and there is a Department of Justice antitrust matter hanging over the egg industry. Excellent balance sheet, deteriorating earnings, legal overhang. Not yet.

Teekay Tankers rounds out the group. It trades around 6 times trailing earnings with a current ratio of 5.66, but its trailing twelve-month EPS above $10 reflects spot tanker rates at multi-decade highs, lifted by Strait of Hormuz disruption, and the stock has returned more than 130 percent over the past year. The modest fixed dividend of $1.00 a year tells you management knows these earnings are not the run rate. When spot rates normalize, the trailing multiple will look very different.

The Three Rejections: When You Do Not Actually Own the Company

Three China-based names failed the screen outright this month, not on valuation but on structure: FinVolution Group (NYSE: FINV), Trip.com Group (NASDAQ: TCOM), and Weibo (NASDAQ: WB). All three are variable interest entities, which is an automatic fail gate here rather than a factor to be weighed against a cheap price. The short version is that a VIE shareholder owns a claim on a web of contracts with a mainland operating company, not the assets or the equity of the business that actually earns the money. For a framework built on having a real claim to real assets, that is disqualifying no matter how attractive the headline ratios look. The full mechanics — why the structure exists, what the offshore holding company actually holds, and where the enforcement and delisting risks sit — are covered in our explainer on VIE structures.

What Next Month's Screen Will Be Watching

The most important item is Ingredion's post-deal balance sheet. The question is whether a name that passed cleanly in May still clears the leverage and liquidity gates once the Tate & Lyle financing is on the books, and that is the single re-review most likely to change a rating. For Century Communities, the variable to track is the rate path into the spring selling season, since the buydown drag and the thin margin move together with mortgage rates. For the three cyclicals on WATCH, watch for the first signs that peak earnings are rolling over. As charter rates, egg prices, and tanker spot rates normalize, trailing P/Es will rise and the trap will become visible in the multiple itself, which is often the moment a cyclical actually becomes interesting. The VIE hard gate stays exactly where it is.