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Forbes
19-05-2025
- Business
- Forbes
Molson Coors And Cigna Head My 'Do Nothing' Stock List
You probably wouldn't bet on a horse that usually finishes in the middle of the pack. But in the stock market, sometimes that's a good idea. Once a year, I write about my 'Do Nothing Club,' a group of stocks that linger near their prices from a year ago, but that I believe may levitate in the coming year. In 21 years, my Do-Nothing stocks have averaged a 14.3% return over the year following publication, beating the Standard & Poor's 500 Total Return Index at 10.1%. Of course, price stagnation in and of itself is no reason to get excited about a stock. You need something to light a spark. But just because a stock has been quiescent for a while is no reason to disdain it. Here are five Do-Nothing stocks that look promising to me now. Beer makers have had a tough time, as young people lean to other beverages. Nonetheless, Molson Coors Beverage Co. (TAP) has grown its earnings at a 16% clip in the past five years. Sensibly, Molson Coors is diversifying out of reliance on beer. For example, it sells Arnold Palmer Spiked iced-tea-and-lemonade drinks, and Simply Spiked lemonade. It also offers Dwayne Johnson's ZOA Energy drinks, and Blue Run whiskey. Will this work? I don't know, but the stock is cheap enough to make me think it's a good speculation. The shares go for under book value (corporate net worth per share). Health-care costs keep rising, making it tough for health insurers. In addition, the federal government periodically pressures the insurers to charge less, pay claims more generously, or both. In this unpleasant environment, Cigna Corp (CI) has shown a profit in 29 of the past 30 years. Its stock sells for 18 times the past four quarters' earnings, but only 10 times analysts' profit estimates for 2026. The stock is down about 4% over the past year, and I think it is likely to bounce. LKQ Corp. (LKQ) is an auto-parts recycling company. While the tariff picture seems to change every week, it looks to me as if there will be some meaningful tariffs on imported cars. If so, people may keep their old cars longer, leading to more repairs, and hence more demand for spare parts. Based in Antioch, Tennessee, LKQ has about 1,500 auto-salvage sites in the U.S., Canada and Europe. It has increased its profits by more than 12% a year over the past decade. Last year, however, was flat. The stock is selling for 0.78 times revenue. Its normal price-to-revenue multiple is 1.08. The Trump administration's tariff policy is in flux, but for now, there's a 25% tariff on imported aluminum. The U.S. Chamber of Commerce says that such tariffs hurt American manufacturing by raising costs. I agree, but I think the tariffs as they currently stand are favorable for Century Aluminum Co. (CENX), which has struggled for years. In the past 15 years, Century has had only five annual profits and 10 losses. It had a good year in 2024 and analysts think the next couple of years look good. A small-company stock I like is Preformed Line Products Co. (PLPC) of Cleveland, Ohio. It makes products used to construct or maintain telephone and utility lines. These products may provide insulation, protection, or flow regulation, among other things. Preformed Line Products had sales of about $601 million in the past four quarters, and the market value of its stock is about $683 million. It has shown a profit in each of the past 15 years. This month, the company acquired a similar outfit in Brazil, JAP Telecom. It already had a presence in Brazil. My Do-Nothing picks have beaten the Standard & Poor's 500 12 times out of 21, while averaging about four percentage points better than the index. 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. Four of the five Do-Nothing stocks I recommended a year ago managed to beat the S&P's return of 13.8%. Banner corp. (BANR) returned 46%, Cisco Systems Inc. (CSCO) 41%, PayPal Holdings Inc. (PYPL) 17% and Sabine Royalty Trust (SBR) 14%. However, Schlumberger Ltd. (SLB) fell 21%. The five stocks together notched a 19.4% return. Disclosure: A hedge fund I run owns call options on Schlumberger. Correction: In a recent article on low-debt stocks, I misstated the return on my recommendations a year ago. Alpha Metallurgical Resources was down 57%, not up 57%. Therefore, my selections as a group rose 16.1%. not 39.8%. They still beat the S&P 500 but by a much narrower margin than I had stated.
Yahoo
23-04-2025
- Business
- Yahoo
5 Small Stocks That Ring My Bells
April 21, 2025 (Maple Hill Syndicate) Traditionally, large stocks were considered more international, and small stocks more domestic. At a time of trade hostilities, you'd think that small stocks would be doing well. Alas, not. This year through April 18, big stocks (as measured by the Standard & Poor's 500 Total Return Index) are down 9.8%, while small ones (gauged by the Russell 2000 Index) have fallen 15.3%. This is partly because the small fry are more volatile, and partly because in times of stress, people flee to the relative safety of big stocks. Nonetheless, small stocks have advantages. They are less combed over by Wall Street analysts, and offer a better chance of big gains if you choose astutely. Here are five little stocks that look promising to me. Apogee Apogee Enterprises Inc. (NASDAQ:APOG), based in Minneapolis, Minnesota, makes architectural glass and framing, especially for skyscrapers. The stock has been a miserable investment or a great one, depending on your timing. It's down 36% so far this year but up 150% over the past five years. Right now, Apogee stock is out of favor, partly because commercial real estate is suffering in a post-Covid world. It sells for about 10 times the past four quarters' earnings. Over the past decade, that multiple has usually been more like 17. Bank7 Based in Oklahoma City, Oklahoma, Bank7 Corp. (NASDAQ:BSVN) has compiled a strong record of profitability. I like to see banks earn at least 1.0% on assets. Bank7 has done that nine years in a row, including six years where the figure was over 2.0%. Unlike most banks, Bank7 has no corporate debt. It has increased its earnings by 18% a year over the past five years. The stock sells for less than eight times recent earnings. Legacy Housing A small homebuilder based in Bedford, Texas, Legacy Housing Corp. (NASDAQ:LEGH) specializes in very small homes and manufactured homes. If the economy slows down, as seems possible this year, I would guess that the low end of the housing market might be a good place to be. Mortgage rates remain higher than any homebuilder would prefer. But Legacy has very little debt, and so can probably make it through tough times if necessary. The stock sells for 10 times earnings and 1.2 times book value (corporate net worth per share). Monarch Cement Over the past decade, Monarch Cement Co. (MCEM) has increased its annual profits an average of 24% a year coincidentally, the same as Alphabet Inc., the parent of Google. The stock has done extremely well, up 650% in the past ten years. It's up 7% year-to-date, defying the general downtrend. Monarch stock is fairly inexpensive, selling for 13 times recent earnings. And the company is debt-free, a quality I love and rarely see these days. Based in Humboldt, Kansas, the company has little or no Wall Street coverage. Steel Partners Though its name might fool you, Steel Partners Holdings LP (NYSE:SPLP) of New York City is not a steel maker. It's more of a small conglomerate. It makes building materials and tubing, owns WebBank in Utah, and runs a youth sports business in New Jersey. Steel Partners had four losses in the six years through 2019, but has been nicely profitable since, with a return on equity of 25% last year. Since the company is structured as a limited partnership, owning this stock may complicate your tax return. The Record Since the beginning of 2000, I've written 27 columns recommending small-cap stocks. The average one-year return on my recommendations has been 14.1%. That beats both the Standard & Poor's 500 Total Return Index at 8.5% and the Russell 2000 Index (with dividends reinvested) at 9.8%. My picks in this series have been profitable 19 times out of 27. They have beaten the large-cap index 16 times and the small-cap index 15 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. I'd rather not tell you how last year's picks did, but I reluctantly will. All five of my picks from a year ago are down significantly, with an average loss of 40.7%. By comparison the S&P was up 8.5% and the Russell 2000 was down 3.4%. While all my picks did badly, the worst was Quanex Building Products Corp. (NYSE:NX), down 52%. The least disastrous was John B. Sanfilippo & Son Inc. (NASDAQ:JBSS) down 29%. That shows the dangers small-caps can pose. But the long-term results show the benefits. Disclosure: I own Alphabet personally and for almost all of my clients. John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts. His firm or clients may own or trade securities mentioned in this column. He can be reached at jdorfman@ This article first appeared on GuruFocus. Sign in to access your portfolio
Forbes
21-04-2025
- Business
- Forbes
Five Small-Capitalization Stocks That Ring My Bells
Small stocks can sometimes be undiscovered gems, offering above-average capital gains. Traditionally, large stocks were considered more international, and small stocks more domestic. At a time of trade hostilities, you'd think that small stocks would be doing well. Alas, not. This year through April 18, big stocks (as measured by the Standard & Poor's 500 Total Return Index) are down 9.8%, while small ones (gauged by the Russell 2000 Index) have fallen 15.3%. This is partly because the small fry are more volatile, and partly because in times of stress, people flee to the relative safety of big stocks. Nonetheless, small stocks have advantages. They are less combed over by Wall Street analysts, and offer a better chance of big gains if you choose astutely. Here are five little stocks that look promising to me. Apogee Enterprises Inc. (APOG), based in Minneapolis, Minnesota, makes architectural glass and framing, especially for skyscrapers. The stock has been a miserable investment or a great one, depending on your timing. It's down 36% so far this year but up 150% over the past five years. Right now, Apogee stock is out of favor, partly because commercial real estate is suffering in a post-Covid world. It sells for about 10 times the past four quarters' earnings. Over the past decade, that multiple has usually been more like 17. Based in Oklahoma City, Oklahoma, Bank7 Corp. (BSVN) has compiled a strong record of profitability. I like to see banks earn at least 1.0% on assets. Bank7 has done that nine years in a row, including six years where the figure was over 2.0%. Unlike most banks, Bank7 has no corporate debt. It has increased its earnings by 18% a year over the past five years. The stock sells for less than eight times recent earnings. A small homebuilder based in Bedford, Texas, Legacy Housing Corp. (LEGH) specializes in very small homes and manufactured homes. If the economy slows down, as seems possible this year, I would guess that the low end of the housing market might be a good place to be. Mortgage rates remain higher than any homebuilder would prefer. But Legacy has very little debt, and so can probably make it through tough times if necessary. The stock sells for 10 times earnings and 1.2 times book value (corporate net worth per share). Over the past decade, Monarch Cement Co. (MCEM) has increased its annual profits an average of 24% a year – coincidentally, the same as Alphabet Inc., the parent of Google. The stock has done extremely well, up 650% in the past ten years. It's up 7% year-to-date, defying the general downtrend. Monarch stock is fairly inexpensive, selling for 13 times recent earnings. And the company is debt-free, a quality I love and rarely see these days. Based in Humboldt, Kansas, the company has little or no Wall Street coverage. Though its name might fool you, Steel Partners Holdings LP (SPLP) of New York City is not a steel maker. It's more of a small conglomerate. It makes building materials and tubing, owns WebBank in Utah, and runs a youth sports business in New Jersey. Steel Partners had four losses in the six years through 2019, but has been nicely profitable since, with a return on equity of 25% last year. Since the company is structured as a limited partnership, owning this stock may complicate your tax return. Since the beginning of 2000, I've written 27 columns recommending small-cap stocks. The average one-year return on my recommendations has been 14.1%. That beats both the Standard & Poor's 500 Total Return Index at 8.5% and the Russell 2000 Index (with dividends reinvested) at 9.8%. My picks in this series have been profitable 19 times out of 27. They have beaten the large-cap index 16 times and the small-cap index 15 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. I'd rather not tell you how last year's picks did, but I reluctantly will. All five of my picks from a year ago are down significantly, with an average loss of 40.7%. By comparison the S&P was up 8.5% and the Russell 2000 was down 3.4%. While all my picks did badly, the worst was Quanex Building Products Corp. (NX), down 52%. The least disastrous was John B. Sanfilippo & Son Inc. (JBSS) down 29%. That shows the dangers small-caps can pose. But the long-term results show the benefits. Disclosure: I own Alphabet personally and for almost all of my clients.
