Perfect 10 Portfolio Has Averaged an 18% Return

July 14, 2025 -- (Maple Hill Syndicate) Darn! Missed by a whisker.

My Perfect 10 Portfolio returned 14.6% in the past year, a hair behind the Standard & Poor's 500 Total Return Index at 14.7%.

That doesn't damper my enthusiasm for this portfolio. In 22 years, it has averaged more than an 18% return, while the index weighs in at just above 11%.

What is the Perfect 10 Portfolio? It's an annual collection of ten stocks I recommend, each of which sells for 10 times the company's earnings per share.

That ratio shows that these are unpopular stocks. Over many years, the average multiple has been about 15. Today's it's 24. So, these stocks, with a multiple of 10, are definitely out of favor.

And that's what I like. Unpopular stocks can be rediscovered by investors and surge in price.

Here are the ten new members of the Perfect 10 Portfolio.

Halliburton

One of the Big Three oil-services companies (along with Schlumberger and Baker Hughes), Halliburton Co. HAL is highly profitable lately, with a return on equity lately above 20%. It has been above that level for four years in a row, following a bad stretch when it lost money in five years out of six.

D.R. Horton

The largest U.S. homebuilder, D.R. Horton Inc. DHI sells homes at a wide variety of price points. The industry is in the doldrums now, thanks mostly to forbiddingly high mortgage rates. I don't know when the ice will melt, but I feel that patient investors will be rewarded here.

Bunge

Best known as an oilseed processor, Bunge Global SA BG processes several kinds of agricultural products. Over the past decade, it has averaged 16% annual earnings growth. Last year profits fell; hence, the stock's cheapness. Analysts expect flattish earnings through 2027. I am more optimistic.

Molson Coors

Beer maker Molson Coors Beverage Co. TAP was on this list a year ago, and its stock price has barely budged since then. I like the company's efforts to diversify away from beer into other drinks that appeal to young people, such as hard seltzer, energy drinks and non-alcoholic cocktails.

Murphy Oil

Murphy Oil Corp. MUR has doubled in the past five years, but is down 36% in the past year as oil prices have slid. Now that incentives for solar energy have been reduced, oil and gas companies may make a comeback. The stock sells for less than book value (corporate net worth per share).

Visteon

Visteon corp. VC is an auto-parts maker spun off from Ford Motor Co. 25 years ago. It still supplies some parts to Ford, but its customer list now includes General Motors, Honda, Nissan, Stellantis, Volkswagen and others. The stock bounces around considerably on tariff news.

Academy Sports

Speaking of tariffs, Academy Sports and Outdoors Inc. ASO, based in Katy, Texas, has been nicked by them. It sells sporting goods and footwear in 21 states. About 9% of its merchandise was recently imported from China. It is trying to diversify its supply chain.

Steelcase

Although it sells some furniture for homes, Steelcase Inc. SCS gets most of its revenue from office furniture. The decline in demand for office space after the pandemic hurt it badly. In the past year, there was a little glimmer of recovery: Earnings were up about 22% on a 2.7% revenue increase.

Columbia Banking

Based in Tacoma, Washington, Columbia Banking System Inc. COLB is the parent of Columbia State Bank. It has offices in Washington, Oregon and Idaho, and also does business in California. Financial results have been improving, with a return on assets above 1% in five of the past seven years.

Rayonier

Rayonier Inc. RYN, with headquarters in Wildlight, Florida, owns some two million acres of timberland in the U.S., and some in New Zealand as well. It's structured as a real estate investment trust, which has tax advantages and disadvantages (it makes your tax return more complicated).

Performance

The past year saw mixed performance within the Perfect 10 Portfolio. Fox Corp. FOX and M&T Bank Corp. MTB did well, up 64% and 35% respectively. On the flip side, Miller Industries Inc. MLR, fell 14% and D.R. Horton Inc. DHI, edged down 2%.

In 22 years, the Perfect 10 Portfolio has been profitable 18 times and has beaten the S&P 500 a dozen times.

Bear in mind that my column results are hypothetical and shouldn't be confused with results I obtain for clients. Also, past performance doesn't predict the future.

Disclosure: I own Schlumberger personally and for some clients. My wife and some of my clients own Fox. One client owns D.R. Horton.

John Dorfman is chairman of Dorfman Value Investments LLC in Boston, and a syndicated columnist. His firm or clients may own or trade securities discussed in this column. He can be reached at jdorfman@dorfmanvalue.com.