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 West Pharmaceutical Services, Inc. (NYSE:WST) 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).
Benjamin Graham
West Pharmaceutical Services, Inc. (NSYE:WST)
Number of Hedge Fund Holders: 35
West Pharmaceutical Services, Inc. (NYSE:WST) is a global leader in advanced containment and delivery systems for injectable drugs, offering proprietary packaging, drug delivery devices, and contract manufacturing. Its two segments are Proprietary Products—featuring elastomers, syringes, vials, and self-injection devices—and Contract-Manufactured Products, which designs and assembles complex devices for pharmaceutical and medical clients.
West Pharmaceutical Services, Inc. (NYSE:WST) reported Q1 2025 net sales of $698 million, with a 2.1% organic sales increase. The gross profit margin stood 33.2%. Adjusted operating profit margin increased by 20 basis points to 17.9%, while adjusted diluted EPS declined by 7.1%, though it improved by 1.4% excluding certain adjustments. The proprietary products segment, particularly in GLP-1s, showed growth, though biologics and delivery devices faced challenges. Contract manufacturing saw low single-digit growth, primarily from self-injection devices. The company has increased its full-year 2025 revenue guidance to $2.945 billion–$2.975 billion, reflecting foreign currency exchange impacts. The company expects organic sales growth of 2%–3%, unchanged from previous guidance.
West Pharmaceutical Services (NYSE:WST) is addressing several key issues impacting its high-value product (HVP) outlook. While demand remains strong, a short-term constraint has occurred at one of their facilities due to a customer switching product types. This is causing delays, but the company expects a boost in HVP components in the second half of the year. Additionally, pricing has been slightly lower than anticipated, although the impact is minimal. On the geopolitical front, while tariffs and macroeconomic factors are a concern, the company has mitigated risks through strategies like passing costs to customers and regional manufacturing. They are not seeing significant changes in customer behavior or demand despite government spending cuts or healthcare concerns. The company also sees a positive growth outlook with continued demand and projects potential for future growth in AnnexOne, a high-margin initiative.
Overall, WST ranks 7th on our list of Benjamin Graham stocks for defensive investors. While we acknowledge the growth potential of WST, 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 WST 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.
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