By John Reese, Validea

We select stocks based on a variety of screens that are each based on the investment strategy of long-standing "legendary" investors.

Forest Laboratories (FRX) scores a 100% rating in our Value Investor screen that is based on Benjamin Graham. The company develops ethical drug products; its principal products include Lexapro, Namenda, Bystolic, Savella and Teflaro.

FRX is neither a technology nor financial company, and therefore this Ben Graham value methodology is applicable.

Under this approach, the investor must select companies of "adequate size". This includes companies with annual sales greater than $340 million. FRX's sales of $4.6 billion, based on trailing 12 month sales, pass this test.

The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. FRX's current ratio of 3.53 passes the test.

For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities).

Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for FRX is zero, while the net current assets are $2.7 billion. FRX passes this test.

Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last five years.

Companies with this type of growth tend to be financially secure and have proven themselves over time. FRX's EPS growth over that period of 164.9% passes the EPS growth test.

The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15.

Stocks with moderate P/Es are more defensive by nature. FRX's P/E of 11.60 (using the 3 year PE) passes this test.

The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. FRX's Price/Book ratio is 1.57, while the P/E is 11.60. FRX passes the Price/Book test.

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