{"id":45441,"date":"2023-08-07T11:18:38","date_gmt":"2023-08-07T15:18:38","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/a-dozen-low-risk-solid-growth-stock-ideas\/"},"modified":"2023-08-07T11:18:40","modified_gmt":"2023-08-07T15:18:40","slug":"a-dozen-low-risk-solid-growth-stock-ideas","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=45441","title":{"rendered":"A Dozen Low Risk, Solid Growth Stock Ideas"},"content":{"rendered":"
\n

The Sane Portfolio wasn\u2019t intended to burn up the track. This is a hypothetical portfolio that I devised in 1999 and have refreshed almost every year since. It\u2019s intended as a slightly conservative, middle-of-the-road collection of stocks. But in the past year it\u2019s risen 23%.<\/p>\n

To be eligible for the Sane Portfolio, a stock must leap seven hurdles. None is especially hard by itself, but few companies can jump all seven. The hurdles are:<\/p>\n

\u00b7 Market value of at least $1 billion.<\/p>\n

\u00b7 Debt less than stockholders\u2019 equity.<\/p>\n

\u00b7 Return on stockholders\u2019 equity of 10% or better. (This criterion has been revised from time to time.)<\/p>\n

<\/fbs-ad><\/p>\n

\u00b7 Stock price less than 18 times per-share earnings.<\/p>\n

\u00b7 Stock price less than 3 times per-share sales.<\/p>\n

\u00b7 Stock price less than 3 times book value (corporate net worth per share).<\/p>\n

\u00b7 Five-year earnings growth averaging 5% or better.<\/p>\n

From among the eligible stocks, I pick a dozen. Once a stock is in, it stays in until it fails to meet one of the criteria. This year eight companies are back, and I\u2019ve picked four new ones.<\/p>\n

Winning Streaks<\/h2>\n

D.R. Horton <\/strong>(DHI), the nation\u2019s largest homebuilder, is back for a fourth year in a row. Rising mortgage rates are hurting home sales, but there\u2019s a housing shortage, so the homebuilders are getting a good price for each home they build.<\/p>\n

Amkor Technology<\/strong>
\n AMKR
\n <\/fbs-ticker> returns for a third year. It makes testing and packaging equipment for semiconductor companies. It struggled in 2022, a tough year for technology. But it managed to stay on the list.<\/p>\n

Another three-time selectee is Encore Wire<\/strong>
\n WIRE
\n <\/fbs-ticker>, which makes wire and cable for commercial and residential buildings. The Texas company boasted a 32% return on stockholders\u2019 equity in the past four quarters. It is riding a 27-year profit streak and is debt-free.<\/p>\n

It\u2019s also the third year on the list for Nucor<\/strong>
\n NUE
\n <\/fbs-ticker> , the nation\u2019s largest steel company. Nucor was a pioneer in steel recycling and the use of electric-arc furnaces. The stock seems attractive to me at eight times earnings.<\/p>\n

The final three-time selectee is Paccar<\/strong>
\n PCAR
\n <\/fbs-ticker> , the maker of Kenworth and Peterbilt heavy-duty trucks. Paccar has been profitable in each of the past 30 years, a claim few companies can make.<\/p>\n

Back for Seconds<\/h2>\n

Mueller Industrie<\/strong>s
\n MLI
\n <\/fbs-ticker>, added to the Sane Portfolio last year, returns. The company makes metal parts such as refrigerator coils. Its return on equity is in the upper atmosphere at 35%. Yet it\u2019s cheap, at just seven times earnings.<\/p>\n

Also back for seconds is Boise Cascade<\/strong>
\n BCC
\n <\/fbs-ticker> , which produces plywood, engineered wood products and lumber products such as siding. Most analysts rate it a \u201chold,\u201d often a euphemism for \u201csell.\u201d But I think it looks good at less than eight times earnings.<\/p>\n

The next returnee is Columbia Sportswear Co. <\/strong>(COLM). Apparel isn\u2019t an easy field, but Columbia is consistently profitable. It has little debt \u2013 a good thing now that interest rates are no longer low.<\/p>\n

This year there is room for four new companies in the Sane Portfolio.<\/p>\n

Newcomers<\/h2>\n

I\u2019ll start with Archer-Daniels Midland Co. <\/strong>(ADM), a big processor of soybeans and other agricultural products. Over the past decade, Archer-Daniels has grown its profits at a pace of almost 10% a year.<\/p>\n

W.R. Berkley<\/strong> (WRB) is an insurance holding company in Greenwich, Connecticut, that owns more than 50 casualty-insurance companies. You never know with hurricanes, tornados and earthquakes, but I think this company is a good value.<\/p>\n

CF Industries Holdings<\/strong>
\n CF
\n <\/fbs-ticker> is a major producer of fertilizer. I could be wrong, but I figure that as farmers face adverse climate trends, they will need fertilizer more than ever.<\/p>\n

I\u2019ll round out the 2023 Sane Portfolio with an energy producer, Coterra Energy<\/strong> (CTRA). It explores for and produces oil and gas in Appalachia, the Permian Basin and Oklahoma. Profits, historically uneven, have been strong lately.<\/p>\n

The Record<\/h2>\n

The Sane Portfolio\u2019s 23.3% return in the past year nicely beat the Standard & Poor\u2019s 500 Total Return Index at 13.0%. D.R. Horton and Boise Cascade were each up more than 60%. On the losing side, SSR Mining (SSRM) dropped 11% and Laboratory Corp. of America (LH) fell 2%.<\/p>\n

Bear in mind that my column results are hypothetical and shouldn\u2019t be confused with results I obtain for clients. Also, past performance doesn\u2019t predict the future.<\/p>\n

Longer-term, the Sane Portfolio has averaged an 11.1% gain year, edging out the S&P 500 at 9.9%. The portfolio has been profitable in 16 out of 21 years, and has beaten the index 12 times.<\/p>\n

Disclosure: A hedge fund I run owns Amkor Technology and Encore Wire, plus call options on Nucor. One of my clients owns SSR Mining. <\/em><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The Sane Portfolio wasn\u2019t intended to burn up the track. This is a hypothetical portfolio that I devised in 1999 and have refreshed almost every year since. It\u2019s intended as a slightly conservative, middle-of-the-road collection of stocks. But in the past year it\u2019s risen 23%. To be eligible for the Sane Portfolio, a stock must […]<\/p>\n","protected":false},"author":1,"featured_media":45442,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-45441","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-featured"],"yoast_head":"\nA Dozen Low Risk, Solid Growth Stock Ideas | iFintechWorld<\/title>\n<meta name=\"description\" content=\"The Sane Portfolio wasn\u2019t intended to burn up the track. 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