We recently published a list of 10 Benjamin Graham Stocks for Defensive Investors. In this article, we are going to take a look at where Graco Inc. (NYSE:GGG) stands against other Benjamin Graham stocks for defensive investors.
Markets in early 2025 are a bit like a moody spring—75 degrees one day, stormy the next. After a strong run in 2023 and 2024, the S&P 500 dropped over 5% year-to-date as investors digested a mix of policy uncertainties, uncertainty around interest rate cuts, and pockets of corporate underperformance. Many stocks are being re-priced as investors grow more selective, and earnings outlooks weaken. At the same time, the bond market is quietly signaling a shift. Treasury yields are still elevated, but there’s a growing sense that the Fed may be near the end of its hiking cycle. That has made Treasury and investment-grade bonds more attractive, especially compared to volatile equities. The market is in transition. Investors are moving from chasing momentum to seeking quality. Caution, realism, and discipline are back in style, and so are value stocks.
Preparing for a potential recession is less about panic and more about applying timeless principles—many of which were championed by Benjamin Graham, the father of value investing. Graham taught that the key to long-term investment success lies in discipline, patience, and a deep understanding of value. In uncertain economic times, those lessons are more relevant than ever. Graham said in his book The Intelligent Investor:
“The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). In the short run, the market is a voting machine but in the long run, it is a weighing machine.”
Rather than trying to time the market, investors should focus on building a portfolio grounded in quality and resilience. Graham favored companies with strong fundamentals, conservative balance sheets, and consistent earnings power—attributes that tend to shine when the economy slows. Dividend-paying stocks with a history of reliability also fit neatly into Graham’s framework, offering both income and a margin of safety. Graham said in The Intelligent Investor:
“The essence of investment management is the management of risks, not the management of returns.”
Diversification, another core tenet of Graham’s philosophy, helps investors avoid overexposure to any one sector or asset class. Holding a variety of investments—equities, bonds, and even cash—can smooth returns and provide flexibility. Graham often emphasized the importance of keeping a cash reserve, not just for protection, but as a source of opportunity when market prices become irrationally low.
Graham said, “The investor’s chief problem—and even his worst enemy—is likely to be himself.” Emotional discipline, especially during turbulent markets, is essential. By remaining rational, reassessing risk exposure, and maintaining a long-term mindset, investors can navigate recessionary periods with the confidence that volatility, like all market conditions, is temporary—and often presents some of the best chances to buy quality assets at a discount.
Our Methodology
We used the Classic Benjamin Graham Stock Screener by Graham Value to compile a list of the 10 Benjamin Graham stocks for defensive investors. We considered the top 20 stocks on our screen and picked the ones with the highest number of hedge fund investors, as of Q4 2024. The stocks are sorted in ascending order of hedge fund sentiment.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A technician in a factory controlling the production of fluid and powder materials.
Graco Inc. (NYSE:GGG)
Number of Hedge Fund Holders: 26
Graco Inc. (NYSE:GGG) is a global manufacturer specializing in fluid and coating management systems and serving industries such as manufacturing, construction, and maintenance. Graco designs and markets equipment for moving, mixing, and spraying complex materials. The company targets niche markets with differentiated, high-quality products that improve efficiency and sustainability. Graco invests heavily in innovation, expands through strategic acquisitions and global distribution, and leverages specialized third-party partners. Recent acquisitions in 2024 broadened its offerings and capabilities. Strong engineering, manufacturing, and customer service underpin its premium customer experience.
Graco Inc. (NYSE:GGG) reported strong first-quarter results for 2025, with sales up 7% to $528 million, driven by a 6% contribution from acquisitions and 3% organic growth. Net earnings rose 2% to $124 million, and adjusted earnings increased 8% to $120 million. Despite gross margin declines from acquisitions and lower factory volume, operating earnings grew 8%. All business segments, except Contractor EMEA, showed growth. Graco Inc. (NYSE:GGG) maintained its low single-digit growth guidance for 2025, supported by stable demand, acquisition performance, and recovering markets, while factoring in modest tariff-related headwinds and planned mitigation strategies.
Overall, GGG ranks 10th on our list of Benjamin Graham stocks for defensive investors. While we acknowledge the growth potential of GGG, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than GGG but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
