We study the stability number, chromatic number and clique cover of graphs with no induced P, and diamonds. In particular, we provide a way to obtain all imperfect (P-5, diamond)-free graphs by iterated point multiplication or substitution from a finite collection of small basic graphs. Corollaries of this and other structural properties. among which a result of Bacso and Tuza, are (i) combinatorial algorithms to solve coloring, clique cover and stable set in the class of (P-5, diamond)-free graphs, (ii) a complete description of the stable set polytope of (P-5, diamond)-free graphs, and (iii) the existence of non-trivial h-perfect graphs which are not t-perfect. (C) 2002 Elsevier Science B.V. All rights reserved.