Author: John Dorfman
These CEOs are Stepping Up to Buy on Bad News
Posted: March 10, 2026
March 9, 2026 (Maple Hill Syndicate) –- I like to see chief executives step up and buy their own company’s shares amidst bad news. It’s a sign of faith that goes beyond rhetoric.
Here are three recent instances.
KKR
The private-equity industry – consisting of partnerships that invest in companies that aren’t publicly traded – has suffered a three-year slowdown in profits and incoming investments.
One of the best-known companies in the field is KKR & Co., formerly known as Kohlberg Kravis Roberts & Co. Although it invests in private companies, KKR itself is public, having made its initial public offering in 2010.
In the 1980s and 1990s, before it went public, KKR was one of a handful of dominant firms in private equity. Today the field is overcrowded, and high interest rates are hurting.
A little over a year ago, KKR stock hit an all-time high of $165.82. Since then, it’s been pretty much straight down. The price as of March 6 was about $91.
Five KKR insiders purchased shares in February and early March. The firm’s co-CEOs, Joseph Bae and Scott Nuttall, each spent more than $16 million. In total, Nuttall owns about $1.8 billion in KKR stock, and Bae about $1.6 billion.
Three directors also purchased shares.
Even after the recent slump, KKR shares have given investors a return of 584% over the past ten years. I think the company will return to form.
ServiceNow
Lately you hear a lot of noise about how artificial intelligence, or AI, is going to destroy software companies. In my view, AI is more likely to enhance software products, increasing their value.
William McDermott, the chief executive officer of ServiceNow Inc., bought $3 million worth of his own company’s stock in late February.
ServiceNow stock started the year at about $153 a share, and dropped below $100 in February. McDermott bought pretty close to the low, at $104.60 on February 27. Five trading days later, the stock had rebounded to $124, giving McDermott almost a 19% gain.
It was the first insider purchase by any ServiceNow executive since November 2019, when McDermott last bought shares.
Based in Santa Clara, California, ServiceNow makes software to automate companies’ core functions, especially information technology.
Walker & Dunlop
Commercial real estate has been in the doldrums ever since the pandemic hit in 2020. If people work at home, who needs office buildings? I don’t think the industry is out of the woods yet. But there are some early glimmerings of recovery.
Walker & Dunlop Inc. (WD), based in Bethesda, Maryland, provides financing packages for apartment buildings and other commercial buildings. It has shown a profit for 18 years in a row, but lately the profits have been slender.
The stock hit an all-time high of about $155 in 2021 but has descended to about $48.
William Walker, the CEO, spent about $2 million to buy shares in early March. It was his first purchase since 2013. In between he had sold shares on 16 occasions.
The stock is selling for less than book value (corporate net worth per share). I don’t think it’s good for a quick profit, but think it has good possibilities long-term.
Performance
This is the 77th column I’ve written about insider purchases and sales. I can calculate the returns for 67 columns – all those written from 1999 through a year ago.
My picks from a year ago did well. I noted insider selling in five stocks. Four did worse than the Standard & Poor’s 500 Total Return Index. Doximity Inc. (DOCS) did the worst, falling 58% in a rising market. The one outperformer was JP Morgan Chase & Co., up 27%.
I also recommended three energy stocks that showed insider purchases. Two of them beat the index, notably Noble Corp., which advanced 99%. The dud was Dorchester Minerals LP (DMLP), which fell 2%.
Longer-term results are mixed. Stocks where I noted insider selling have trailed the S&P by an average of 4.8 percentage points per year.
Stocks I said to avoid, despite insider buying, have lagged the S&P by 24 percentage points a year.
Stocks where I noted insider buying, but made no comment (or an ambiguous comment) have beaten the index by 14 points a year.
All that is fine. But there’s a fly in the ointment. The stocks I recommended based on insider buying have lagged the S&P by 2.3 percentage points per year.
So, my record is mixed. But I believe insider trades contain valuable information, and will keep reporting on them –with, I hope, better results on the buy side.
John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts. He or his clients may own or trade securities discussed in this column. He can be reached at jdorfman@dorfmanvalue.com.
Getting Your Sectors Weights Right is Key – and Hard
Posted: March 03, 2026
March 2, 2025 (Maple Hill Syndicate) –- Think of the U.S. stock market as a pizza. According to Standard & Poor’s, it’s cut into 11 pieces, or sectors.
Astute or poor sector selection often makes the difference between a good year in the market or a bad one. Here are my views on the 11 sectors, listed in order of their performance in the 12 months through January (the “period return”). During that time, the S&P 500 Total Return Index returned 16.35%.
Communication Services
Period return 29.5%. The communication services sector includes media and internet stocks, such as Alphabet Inc. (GOOGL), Meta Platforms Inc. (META), Netflix Inc. (NFLX) and Walt Disney Co. (DIS), as well as traditional telephone stocks such as AT&T Inc. (T), Verizon Communications Inc. (VZ) and T-Mobile US Inc. (TMUS).
I think the group will continue to do well. Many of these companies are ad-dependent and will benefit from political advertising in an election year.
Technology
Period return 25.6%. Technology stocks surged in the past three years and have sputtered so far this year as investors worry about massive expenditures on data centers.
My stance is to be present in the sector, but underweight. The tech sector is the hub of innovation, so to ignore it would be foolhardy. But the valuations give me a feeling of acrophobia.
For example, Nvidia Corp. (NVDA) sells for 36 times earnings, Taiwan Semiconductor Manufacturing Co. (TSM) 30 times, and Microsoft (MSFT) 25 times. By comparison, the average stock has sold for about 15 times earnings over the years, and about a 24 multiple now.
Energy
Period return 21.8%. I like the oil-and-gas stocks. The price of oil fell in 2025 due to over-abundant supply, but has risen this year because of Middle East strife. In January, energy was the best performing group, jumping 14%.
The Trump administration has banished incentives for people to buy electric cars. And the winter of 2025-2026 was severe. Both factors favor oil-and-gas stocks.
Industrials
Period return 21.3%. This is my favorite sector, for two reasons. First, valuations are down-to-earth. Second, the sector includes the defense stocks, which I favor in a world where the U.S. is at odds with China, Russia and Iran.
My favorite defense stocks aren’t American ones, though. They are European, since Europe is being forced (both by Vladimir Putin and by Donald Trump) to spend more on national defense than it has for decades.
Utilities
Period return 14.3%. Normally stodgy, utilities are popular investments now because tech giants are greedy for electricity to run data centers. I think the popular thesis makes sense but I still feel uneasy.
Why? Minimal sales and earnings growth over the past decade, coupled with pretty high debt levels.
Materials
Period return 13.8%. The materials sector includes chemicals, steel, and mining among other things. My interest is chiefly in gold, which tends to rise when people feel insecure, when government deficits are large, when international tension is high, or when the dollar is weak. Now, all four are true.
Consumer Staples
Period return 9.7%. This is a good group to own during recessions. Even in bad times, people need tissues, toothpaste and soap. I don’t love the group as a whole, but it contains a bargain here and there, in my view.
Health Care
Period return 7.3%. Big pharmaceutical companies face intense pressure to restrain price increases. But health care is usually a good sector for shelter from market downturns.
Eli Lilly & Co. (LLY) has been a standout because of its weight-loss drugs. I think the company will continue to do well, but I’m skeptical of the stock at 45 times earnings. Several of the other pharma companies seem attractively cheap.
Financials
Period return 5.4%. I think financial stocks are due for a comeback.
The best environment for banks is low short-term interest rates (so they don’t have to pay out too much on deposits) and high long-term rates (so they reap rich returns on mortgages and business loans). It looks like that’s the kind of environment we’ll be in this year.
Real Estate
Period return 4.2%. The second-worst performing group for the 12 months through January was real estate, up about 4%. If there are signs of an imminent revival, I can’t discern them.
Consumer Discretionary
Period return 3.3%. Stocks that depend on consumers opening their wallets have struggled. Consumer confidence is low, which I attribute to tariffs, deportations, military threats and skirmishes, and fraying of the Atlantic alliance.
I like the moribund homebuilders, which I believe will take off if mortgage rates subside.
Disclosure: I own Alphabet and Taiwan Semiconductor personally and for most of my clients. One or more of my clients own Nvidia, Eli Lilly and Microsoft.
John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts. He or his clients may own or trade securities discussed in this column. He can be reached at jdorfman@dorfmanvalue.com.
Be DEFT. Enter My Derby of Economic Forecasting Talent.
Posted: March 02, 2026
February 23, 2026 (Maple Hill Syndicate) –- The shrinking middle class worries the winner of my 20th annual Derby of Economic Forecasting Talent (DEFT).
“The distance between the haves and have-nots seems to be growing,” Arlis Swartzendruber says. The percentage of people in the middle class “has shrunk since 1971.”
Swartzendruber, who is retired, lives in Mesquite, Nevada, and was formerly superintendent of schools in Waterloo, Iowa.
In the Derby, contestants predict six economic variables, such as the inflation rate and the price of oil. Rules for the contest are at the end of this column.
Due to the government shutdown, scoring for the 2025-2026 contest involves only five of the six variables. Due to the government shutdown in October-November 2025, we don’t yet know how much the U.S. gross domestic product grew during 2025.
Swartzendruber came close in three of the five categories. No other contestant scored points in more than one category.
Despite his concerns about the wealth gap, Swartzendruber is optimistic long term, citing the book The Fourth Turning by Wiliam Strauss and Neil Howe. It says that every fourth generation produces a profound shift in society.
“I’m 86,” he says. “I’ve lived long enough to see the characteristics of each generation. I have a lot of faith in the next generation of politicians that will be coming along.”
Oil Gushed
Three people tied for second place in the Derby, each with a prescient guess on one of the six variables.
Greg Dunn, a retiree in Pittsburgh, Pennsylvania, came close to guessing the price of a barrel of oil at year-end 2025. He guessed $56; it was $57.97.
At the end of 2024, oil was just above $70 a barrel. What led Dunn to predict that the price would go down? “I really thought there would be a lot of supply,” he says.
He was correct, as U.S. oil-and-gas production hit a record in 2025, pushing the oil price downward. For the rest of this year, Dunn expects an improving economy, with inflation subdued and the job market reviving.
Interest Rates
Tom Powers, a senior vice president of investments at Moors & Cabot in Boston, Massachusetts, earned his share of the silver medal with a good guess on interest rates. Powers guessed 4.20% for 10-year notes at year-end 2025. The actual rate was 4.18%.
He expects a good economy in the rest of 2026, helped partly by artificial intelligence. “We’ve started to use AI,” he says. “It cuts down the time that projects require.”
Imported Butter
Brian Strait, a retiree in Las Vegas, Nevada, got his points by nailing the figure for U.S. retail sales in December 2025. It was $735 billion, exactly as Strait predicted and about $25 billion less than the year before.
Before retiring, Strait spent three decades in the ski industry and 11 years as an importer and distributor of specialty foods. Importing butter from France gave him a taste of dealing with tariffs, and he doesn’t like them.
“Consumers bear the cost,” he says. “Importers are not eating that cost. They can’t afford to.”
You Can Play
Thirty-six people entered the Derby a year ago. Want to show your predictive prowess? Enter my 2026-2027 DEFT Contest.
To enter, answer the six questions below. Email your entry to jdorfman@dorfmanvalue.com, or mail it to John Dorfman, Dorfman Value Investments, 101 Federal Street, Suite 1900, Boston MA 02110. Entries must be sent by March 15, 2026.
Please provide:
- Your name
- Address
- Phone, weekday and weekend if different
- Email address
- Occupation
You aren’t required to state the reasons behind your forecasts, but I appreciate it if you do.
Here are the questions.
- Estimate the growth in U.S. gross domestic product (GDP) in 2026. The figure for 2024 was 2.8%. We don’t have a figure yet for 2025, thanks to a government shutdown in October and November. GDP was rising at a 4.4% pace in the third quarter.
- Consumer prices rose 2.7% in 2025, as measured by the Consumer Price Index (CPI). What will be the rate of inflation in 2026?
- Ten-year government bonds paid 4.18% annual interest as of December 31, 2025. What will be the interest rate at the close of 2026?
- A barrel of West Texas Intermediate crude oil cost $57.97 as 2025 drew to a close. At the end of 2026, what will the oil price be?
- Retail sales in the month of December 2025 totaled $735 billion. What will be the comparable figure for December 2026?
- The unemployment rate was 4.4% at the end of 2025. What will it be at the end of 2026?
John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts. He or his clients may own or trade securities discussed in this column. He can be reached at jdorfman@dorfmanvalue.com.
These Hyper-Pricey Stocks Face Terrible Odds
Posted: February 17, 2026
February 16, 2026 (Maple Hill Syndicate) – Chasing hot growth stocks? Beware of those that sell for 100 times revenue. To say that these represent the triumph of hope over experience is putting it mildly.
For many years, I’ve published a warning list of stocks that sell in that rarified range. Starting in 2000, I’ve compiled 20 lists, bad-mouthing a total of 89 stocks. Here are the results thus far.
Your chance of losing money when you invest in these high fliers is 71%. Your chance of doing worse than the Standard & Poor’s 500 Total Return Index is 82%.
The average return for all 89 stocks has been a loss of 19.1%. Meanwhile, the average return for the S&P 500 has been a gain of 10.8%.
Last Year
To be sure, you might catch lightning in a bottle. Two of the stocks I warned against last year — Revolution Medicines Inc. (RVMD) and AST SpaceMobile Inc. (ASTS) – shot up 141% and 202% respectively.
As a result, my warning list last year paradoxically returned 41.3%, beating the S&P 500 at 15.0%. Score one for the high-priced crowd, but that’s not the way it usually goes. In 15 years out of 20, the warning list has trailed the index.
Three of the stocks on last year’s list did indeed fall. Trump Media and Technology Group Corp. (DJT) dropped more than 63%. Strategy Inc. gave up more than 62%. And IonQ inc. (IONQ) declined 10%.
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.
Sky-high
What stocks are priced in the stratosphere now? Wait, not the stratosphere, make that the ionosphere. The average stock these days sells for about 3.4 times revenue, and that’s well above the historical average of about 2.4.
The price-to-revenue ratio is less popular than the price-to-earnings ratio, but it has some advantages. Notably, it can be used to evaluate companies with scanty earnings, or none.
Stocks that sell for 100 times revenue are typically fledgling companies (often biotech or robotic companies) with a product or service that excites people’s imagination. When investors pay an extravagant price for a stock, the company may do fine, and the stock may still flop.
Expensive Now
On this year’s warning list, I’ll mention five companies in a variety of industries.
AST SpaceMobile Inc., which gave me a black eye in the past year, now sells for 1,150 times revenue. The Midland, Texas, company had revenue of about $57 million last year, and analysts project that to grow to $747 million in 2027.
AST makes satellites, and intends to provide cellular service to people not covered by existing cellular networks. Some people on Reddit and various stock bulletin boards adore it. Analysts are less keen, with only four out of 11 recommending the stock.
Quantum Computing Inc. (QUBT), based in Hoboken, New Jersey, aims to sell quantum computers that can operate at room temperature and low power. Its stock has more than quadrupled in the past three years, and sells for about 2,700 times revenue.
Many people believe that quantum computing will soon become a major part of the technology industry. My only comment is that the field is rich in competition.
Terrestrial Energy Inc. (IMSR), out of Charlotte, North Carolina, is working on nuclear reactors, specifically Integral Molten Salt Reactors (hence the stock symbol). Revenue last year was less than $1 million, but the company’s market value is about $570 million.
The company went public in October 2025, when it was acquired by a special purpose acquisition company (SPAC) called HCM II Acquisition Corp. Since then, the stock has fallen 62%.
Aurora Innovation Inc. (AUR), with headquarters in Pittsburgh, Pennsylvania, makes technology for self-driving cars. So far, it is concentrating on truck routes in Texas and Arizona. Its peak revenue so far was $82 million in 2021; last year it was about $2 million.
Again, my concern is competition. In the self-driving-vehicle realm, Aurora’s competitors are abundant and well-financed.
Finally, Trump Media & Technology Group Corp. (DJT), the parent of Truth Social, sells for more than 600 times earnings. The stock, which went public in March 2024, is supported by the loyalty of President Trump’s followers.
However, Trump Media’s revenue has been stagnant in the neighborhood of $4 million, and the stock has lost about 81% of its value since the public offering.
Can I be certain that these stocks will go down? By no means. But I am sure that if you invest in them, the odds are stacked against you.
Disclosure: A hedge fund I manage has a short position in Strategy Inc.
John Dorfman is chairman of Dorfman Value Investments in Boston, Massachusetts. His firm or clients may own or trade the stocks discussed here. He can be reached at jdorfman@dorfmanvalue.com.
Zoom and Duolingo are Balance Sheet Powerhouses
Posted: February 10, 2026
February 9, 2026 (Maple Hill Syndicate) – Many investors focus myopically on earnings growth. One factor they often neglect is balance-sheet strength.
To correct this oversight, I compile an annual list of Balance Sheet Powerhouses. It’s an honor roll, not necessarily a buy list. Some of the Powerhouse stocks are priced in the ionosphere. But most years I find a few to recommend.
Powerhouses
To qualify as a Balance Sheet Powerhouse, a company must:
- Have a market value of at least $5 billion.
- Carry debt no more than 10% of the company’s net worth.
- Be based in the U.S.
- Have current assets at least twice current liabilities.
- Have earnings of at least 20 cents a share.
I’ve compiled the list from 2001 through 2006, and from 2011 to the present. This year, 49 companies made the roster, coincidentally the same number as last year, and tied for the second-most ever.
I recommend four of them.
Zoom
During the pandemic, Zoom Communications Inc. (ZM) stock jumped more than 500%, as millions of people had to learn how to video-conference. Zoom had first-mover advantage in those days. Today, video conferencing remains highly popular, but Zoom has competition from Microsoft Teams and Google Meet.
Its growth has slowed: Revenue was up only about 5% in the past year. Still, the company has a net profit margin of 33%. The stock sells for 17 times recent earnings and 15 times the profits analysts expect this year.
Mueller
Mueller Industries Inc. (MLI) has made the Powerhouse list the past three years, and I have recommended it each year. In the past 12 months it advanced about 47%.
Based in Collierville, Tennessee, Mueller makes refrigerator coils, tubing, and a variety of other metal and plastic parts. It has shown a profit each year for more than 30 years. Debt is only one percent of the company’s net worth.
Mueller has benefitted from tariff policies under the Trump administration. Raw copper is mostly not subject to tariffs but finished and semi-finished copper products face a 50% tariff.
Duolingo
Duolingo Inc. (DUOL) says that its language-learning application is the top-grossing app in the education category on both the Apple App Store and Google Play. Its annual revenue, a mere $71 million in 2019, is now pushing $1 billion.
The stock climbed well above $500 last spring, but has fallen to about $120. I view the fall partly as a correction of the stock’s previous sky-high valuation: It sold for more than 600 times earnings in 2023.
Another factor in the decline was the departure of chief financial officer Matt Skaruppa. A third factor was the general downward cascade for software stocks, as investors suspect that artificial intelligence will supplant traditional software.
Now, Duolingo stock is down to 15 times recent earnings. At this valuation, I find it attractive.
Edwards
Edwards Lifesciences Corp. (EW), based in Irvine, California, makes artificial heart valves and other medical devices and equipment for heart disease. The stock is more expensive than I normally go for, but the company has increased its earnings at a 15% annual clip over the past decade.
Multi-Year Winners
A few companies deserve recognition for making the Balance Sheet Powerhouse roster this year and 10 times or more in total. Dolby Laboratories Inc. (DLB) has made the list 15 times, the most of any company.
SEI Investments Co. (SEIC) has made it 13 times, and Intuitive Surgical Inc. (ISRG) 12 times. Arista Networks Inc. (ANET) and Cognizant Technology Solutions Corp. (CTSH) are ten-time winners.
Newcomers
We welcome 13 new companies to the list this year. The largest and best-known is Palantir Technologies Inc. (PLTR).
Other newcomers are Astera Labs Inc. (ALAB), BioMarin Pharmaceutical Inc. (BMRN), Krystal Biotech Inc. (KRYS), Nextpower Inc. (NXT), Powell Industries Inc. (POWL), Protagonist Therapeutics Inc. (PTGX), Reddit Inc. (RDDT) and Regeneron Pharmaceuticals Inc. (REGN).
Also: Toast Inc. (TOST), UiPath Inc. (PATH), Vicor Corp. (VICR) and West Pharmaceutical Services Inc. (AST).
Performance
In 21 years, the stocks I’ve recommended from the Balance Sheet Powerhouse list have achieved an average one-year return of 15.5%, compared to 11.1% for the Standard & Poor’s 500 Total Return Index.
A year ago, I recommended five of the Powerhouses. Two fell, but NEXTracker Inc. (NXT) rose 164%, pulling the average performance up to 43.5%, much better than the 15.7% figure for the S&P 500.
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 Edwards Lifesciences personally and for most of my clients, and Mueller Industries for most of my clients.
John Dorfman is chairman of Dorfman Value Investments in Boston, Massachusetts. His firm or clients may own or trade the stocks discussed here. He can be reached at jdorfman@dorfmanvalue.com.
Fox and ASA Display Value and Momentum
Posted: February 03, 2026
February 2, 2026 (Maple Hill Syndicate) – What school of investing do you belong to?
The three most popular schools are value (buying cheap stocks), growth (buying stocks whose earnings are growing fast) and momentum (buying stocks that are going up). I’d say that more than 90% of investors fall into one of these three camps (or a combination of them).
I used to scoff at momentum buying. I thought it was an approach for neophytes.
The numbers say otherwise. According to Standard & Poor’s, momentum stocks returned 27% in 2025, 46% in 2024 and 18% in 2023 (rounded to the nearest percent). Of the three major investing methods, momentum was the best performer in both of the past two years.
I’m a card-carrying value investor, and I have no intention of changing. But in recent years, I’ve started to think that it wouldn’t kill me to buy shares that show some momentum along with value.
Twice a year, I write about stocks that show both characteristics. Here are four new recommendations.
Fox
Fox Corp. (FOX), based in New York City and controlled by the Murdoch family, sold its entertainment operations to Walt Disney Co. in 2019. What it still has are news, sports and business coverage. It also owns the Tubi streaming service and 29 local television stations.
Fox shares are up 33% in the past year (through January), but sell for just under 15 times earnings.
Sports are particularly important for profits at Fox, because they are broadcast live, making it unlikely that viewers will be fast-forwarding through the commercials. Among the events Fox has the right to broadcast are the Superbowl, the World Series and World Cup Soccer.
Great Lakes
A mid-sized stock that looks intriguing is Great Lakes Dredge & Dock Corp. (GLDD), based in Houston, Texas. It has a $1.1 billion backlog, which is interesting because that exceeds the company’s revenue for the past four quarters (about $835 million) and the stock’s market value (about $1 billion).
Great Lakes stock is up about 38% in the past year, and the stock is moderately priced at about 13 times earnings. Wall Street mostly ignores the company. Only five analysts cover it, but all five rate it a “buy.”
Build-a-Bear
A small stock I like is Build-a-Bear Workshop Inc. (BBW), which has its headquarters in St. Louis, Missouri. Build-a-Bear has more than 500 shops in malls and other locations. Children can choose an animal or character and stuff it using a special machine.
When my kids were young, they went to Build-a-Bear shops several times, and enjoyed it.
In recent years, Build-a-Bear has expanded its internet sales, movie tie-ins, and presence in non-mall locations such as cruise ships. The stock is up 50% in the past year, and sells for about 14 times earnings.
ASA Gold
Very cheap, and quite speculative is ASA Gold and Precious Metals Ltd. (ASA), out of Portland, Maine. It’s a closed-end investment fund that invests mainly in gold mining companies.
Closed-end funds are investment companies similar to mutual funds. But they trade like an ordinary stock, and their price may be less or more than the net value of their holdings.
It may seem weird for me to mention a gold fund right after gold experienced its biggest daily decline since the early 1980s. ASA fell more than 10% on January 30. But it has more than doubled in the past year, and sells for only five times earnings.
Safe? No. But I think gold and gold miners are likely to show gains over the coming 12 months because of big government deficits, a falling dollar, and high international tensions.
Performance
Beginning in 2000, I’ve written 48 columns (including today’s) on stocks that show both value and momentum. One-year returns can be calculated for 46 columns.
The average one-year return has been 13.4%, beating the 11.0% average return on the Standard & Poor’s 500 Total Return Index.
My picks from a year ago rose a brisk 61%, versus 17.2% for the index. The best gains were 149% in Century Aluminum Co. (CENX) and 92% in REV Group Inc. (REVG). The sole loser was Cal-Maine Foods Inc. (CALM), down 15%.
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 Build-a-Bear in a hedge fund I run. I own Cal-Maine Foods personally and for most of my clients. Katharine Davidge, my wife and a portfolio manager at my firm, owns Fox for herself and some of her clients.
John Dorfman is chairman of Dorfman Value Investments in Boston, Massachusetts. His firm or clients may own or trade the stocks discussed here. He can be reached at jdorfman@dorfmanvalue.com.
Did the Stock Market Read the January Script?
Posted: January 27, 2026
January 26, 2026 (Maple Hill Syndicate) –- If this were a classical by-the-book January, three things would be happening:
- The stock market would be up.
- Last year’s dogs would look like this year’s tigers.
- Small stocks would be beating big ones.
This year, the stock market is like an actor who has memorized only some of his lines.
For the first three weeks of the year, the market is up but haltingly and feebly. The Standard & Poor’s 500 Total Return Index, a reasonably good gauge of the overall market, is up about 1%.
Last year’s dogs? They are still barking, not roaring. On December 16, I wrote a column about five big losers to that point – Trad Desk Inc. (TTD), Fiserv Inc. (FISV), Cava Group Group (CAVA), Gartner Inc. (IT) and Deckers Outdoor Corp. (DECK).
Of the five, three are down again so far this year. Cava has gained 13%, while Fiserv is up fractionally.
One way in which the market is following the classic script is that small stocks are trouncing big ones. The Russell 2000 index of small stocks is up more than 7%.
Magnificent?
You may be curious how the Magnificent Seven – seven large, popular growth stocks that led the market in 2023-2025 – are doing. The picture is mixed.
Four of the Magnificent Seven show gains in the early going this year, led by Amazon.com Inc. (AMZN) with a 5.6% return. But three of these widely worshipped stocks are down. Apple Inc. (AAPL) has fallen 8.5%, while Microsoft Corp. (MSFT) and Nvidia Corp. (NVDA) are down a tad.
In my view, the Magnificent Seven’s valuations are stretched, and other stocks are better bets for 2026.
Barometer?
There used to be a political saying: As Maine goes, so goes the nation.
Similarly, there’s a notion in the stock market: As January goes, so goes the year. This idea, known as the January barometer, was popularized by the market analyst Yale Hirsch.
The barometer is close to useless. I’ve scrutinized the numbers, going back to 1950. In 76 years, the January barometer has been right 74% of the time, measured in the simplest possible way.
Of course, January is part of the year it is supposed to predict. How does January do at predicting the next 11 months? It’s right 68% of the time.
Now, compare the barometer with a naïve forecasting model that predicts every year will be up. That naïve model is right 78% of the time.
Harbinger?
To me, a more interesting question is whether the market action we’ve seen this January will persist for most of 2026. That would mean moderate gains, with small stocks leading.
I think that’s a good prediction. I highly doubt we’ll see big gains this year. Stock valuations are high, inflation isn’t licked, the president is erratic and the U.S. population is fiercely split politically.
But with profits robust, tax cuts looming, deregulation in the air, and easing by the Federal Reserve fairly likely, I don’t foresee a big decline either.
Small stocks have trailed big ones in eight of the past 10 years. I think they are due for a comeback. I expect the strength in small stocks we’ve seen in January to persist — sporadically, of course. Here are four small and mid-sized stocks I like at current quotes.
Abercombie & Fitch Co. (ANF) retails clothes, especially to young men. The stock is down 22% this year, after the company said fourth-quarter profits will be disappointing. Clothing retailing is a fickle business, but I consider Abercrombie financially strong, and I like the stock at 9 times earnings.
Down 10% in the past year, Bank OZK (OZK) has analysts split. Of ten who follow it, four recommend it. Five give it a tepid “hold” and one calls it a “sell.” I have high respect for the CEO, George Gleason. And the stock seems cheap to me at seven times earnings.
Gentex Corp. (GNTX), from Zeeland, Michigan, makes self-dimming car mirrors. Profits were down a bit last year, and the stock is down about 17% in the past 12 months. Yet the company still earned a 15% return on equity, and I think the stock is attractive at 14 times earnings.
Shutterstock Inc. (SSTK), headquartered in New York City, runs an image database. It has grown its profits rapidly, but analysts fear a slowdown. Only three Wall Street analysts follow the stock, and none of them recommends it. The stock sells for 11 times earnings.
Disclosure: I don’t own the stocks discussed in today’s column, personally or for clients.
John Dorfman is chairman of Dorfman Value Investments LLC in Boston. His firm or its clients may own or trade stocks discussed in this column. He can be reached at jdorfman@dorfmanvalue.com.
After Big Falls, PayPal and TaskUs Look Like Bargains
Posted: January 20, 2026
January 19, 2026 (Maple Hill Syndicate) – No one wants to go to the hospital. But sometimes it’s the best thing for you.
That’s the notion behind my quarterly Casualty List. It contains stocks that have been roughed up in the latest quarter, and that I think can recover and thrive.
My Casualty List picks from a year ago returned 61.08%, well ahead of the 17.22% return on the Standard & Poor’s 500 Total Return 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.
Huntington Ingalls Industries Inc. (HII), a military ship builder, led the list with a 110% return. It benefitted from increased military spending and heightened international tensions.
Peabody Energy Corp. (BTU), the largest U.S. coal mining company, rose 88%. The Trump administration has supported the coal industry, and the nation’s energy appetite has grown, thanks mostly to data centers, which need lots of electricity.
Nucor Corp. (NUE), the largest steelmaker in the U.S., also did well, rising 40%. It benefitted from tariffs on foreign steel, among other factors.
The laggard was D.R. Horton Inc., the nation’s largest homebuilder, which returned 5.6%. Home purchases have been dampened by unpleasant mortgage rates.
Long-Term Record
The Casualty List you’re reading is the 91st one I’ve compiled. One-year returns can be calculated for 87 of the lists, and the average return has been 14.87%. That beats the average return for the Standard & Poor’s 500, which has averaged 11.6%.
Of my 87 columns, 55 showed a profit, but only 40 beat the index.
And now, here are five stocks that were banged up in the fourth quarter, and that I think deserve a spot on my Casualty List.
PayPal
Down 36% over the past year, PayPal Holdings Inc. (PYPL) looks enticing to me at about $57 a share, which works out to a modest 11 times earnings.
PayPal is a leading online payment system, but has lots of competition, including Shopify, Stripe, Venmo and others. The company has grown its revenue 17% a year for a decade. Last year was slower, but revenue still increased by almost 12%.
Most analysts give the stock a tepid “hold” rating, which is often a euphemism for “sell.” Yet those same analysts have an average price target of $75 for the stock, which would mean about a 30% gain.
TaskUs
Slaughtered in the fourth quarter, TaskUs Inc. (TASK) fell almost 34% when a proposal to take the company private fizzled. Based in New Braunfels, Texas, TaskUs provides outsourced customer service for a variety of companies, and content moderation for tech platforms.
TaskUs’s client list has included Meta, Netflix, Uber and Zoom. Revenue growth has slowed but remains brisk. The stock sells for 13 times recent earnings.
Only seven Wall Street analysts follow TaskUs, and only one of them recommends it. Yet again, the price targets tell a more optimistic story. The average price targe is nearly $16 a share, up from the current price of less than $12.
Crane NXT
Spun off from Crane Co. in 2023, Crane NXT Co. (CXT) makes micro-optics technology used to authenticate currency or documents, and for other purposes. One big application is in vending machines. The stock fell more than 29% in the fourth quarter on a revenue-growth disappointment.
Revenue was about $1.6 billion in 2025. Analysts look for $1.7 billion in 2026 and $1.8 billion in 2027. That doesn’t sound so bad to me. The stock sells for about 12 times estimated profits for 2026.
Itron
I also like Itron Inc. (ITRI), based in Liberty Lake, Washington. It makes equipment to measure and manage energy and water use. The stock was pummeled for a 25% loss in the fourth quarter. Weaker bookings and a cut in guidance spurred the decline.
Analysts see better things ahead. Of 13 analysts who follow Itron, 11 recommend it. The average one-year price target is about $140, up from about $100 now.
PVH
Finally, I recommend PVH Corp. (PVH), which makes clothing sold under the Calvin Klein and Tommy Hilfiger brands. Its shares fell about 20% in the fourth quarter and are down 33% in the past year.
What I like about PVH is that the stock is plain old cheap. It sells for 10 times recent earnings, and less than six times the earnings analysts expect this year. It goes for 0.37 times sales and 0.61 times book value. Those are rock-bottom ratios.
Disclosure: I own none of the stocks discussed in today’s column personally. I own D.R. Horton for one client.
John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts. He or his clients may own or trade securities discussed in this column. He can be reached at jdorfman@dorfmanvalue.com.
Analysts’ Darlings Often Fizzle, But Soared in 2025
Posted: January 13, 2026
January 12, 2026 (Maple Hill Syndicate) – Don’t buy the stocks that analysts love.
Don’t buy the ones they hate, either.
Those are conclusions from my 27-year study of the four stocks analysts most adore at the beginning of each year, and the four stocks they most despise.
The average return on the analysts’ darlings has been 8.2%. For the despised stocks it has been 6.7%. Both figures are well below the Standard & Poor’s 500 Total Return Index, at 12.8%.
In 27 years, the analysts’ adored stocks have beaten their despised ones 15 times. Eleven times the despised ones have done better. And one year was a tie.
Only eight times out of 27 have the analysts’ favorites beaten the S&P 500.
Winning Streak
Despite the embarrassing long-term results, the analysts are on a winning streak lately. Their adored stocks have beaten their scorned stocks three years in a row. In 2025, the analysts’ top picks also bested the S&P, 33.0% to 17.9%.
A New York biotech stock, Axsome Therapeutics Inc. (AXSM) powered the analysts’ performance last year. Axsome, which is concentrating on diseases of the central nervous system, returned 116% for the year.
The airlines beloved by the analysts also showed gains. United Airlines Holdings Inc. (UAL) and Delta Air Lines Inc. (DAL) rose 15% and 16% respectively.
The analysts’ only losing stock was Arcellx Inc., a biotech company based in Redwood, California. It fell about 15%.
What about the stocks that analysts hated when 2025 began? The most despised was ZIM Integrated Shipping Services (ZIM). Yet ZIM managed better than a 26% gain for the year.
The analysts were correct to be bearish on Ginkgo Bioworks Holdings Inc. (DNA), which fell more than 15%. AMC Networks Inc. (AMCX) declined about 4%. CNX Resources Corp. (CNX) was close to unchanged.
All in all, the despised stocks eked out a 1.9% gain.
Newly Adored
What stocks do analysts unanimously adore now? According to Zacks Investment Research Inc., the most popular stock is American Sports inc. (AS), with 15 buy recommendations and no dissents.
Based in Helsinki, Finland, American Sports manufactures sporting equipment and clothing under brands that include Wilson, Arc’teryx, Atomic and Peak Performance. It is majority-owned by Anta Sports of China.
After four years of losses, Amer Sports broke into the black in 2024 and increased its profit in 2025. Analysts expect more growth.
Next most popular, with 14 buys and no holds or sells, is Credo Technology Group Holding Ltd. (CRDO). Based in Grand Cayman, the company provides equipment to speed up data transmission within data centers.
Credo has a market value of $27 billion even though revenue in its latest fiscal year was only about $2.4 billion. It is growing fast, and the stock sells for more than 100 times earnings.
Next up, with 13 buy recommendations, is nVent Electric Plc (NVT), based in London. It’s a more established company, with profits in nine of the past ten years. It makes equipment to safeguard electronic processes, manage temperatures, provide grounding, and so on.
Tied with nVent in analysts’ esteem is Krystal Biotech Inc. (KRYS), with headquarters in Pittsburgh, Pennsylvania. It, too, has 13 recommendations and no dissenting opinions, according to the Zacks tally. Krystal has a proprietary platform for gene therapy.
After seven unprofitable years, Krystal turned profitable in 2023 and profits are growing rapidly.
Most Despised
The stock analysts hate most at present is Commonwealth Bank of Australia (CMWAY), the largest bank in that country. Of seven analysts who follow it, six rate it a “sell.” I would agree that 25 times earnings is a lot to pay for a slow-growing bank. But the stock doesn’t seem so terrible to me.
Next-most scorned is Cricut Inc. (CRCT), a company in South Jordan, Utah, that helps people create personalized cards, mugs, t-shirts and the like. The company has a strong balance sheet and is nicely profitable. But five-year earnings growth is poor, and growth is what many analysts care about most.
Then comes Swatch corp. (SWGAY), a Swiss company that makes watches at several different price points. Brands include Omega, Tissot, Breguet and Swatch. The company’s earnings plunged last year and ten-year revenue growth is slightly negative.
Finally, there’s Beach Energy Ltd. (BCHEY), another Australian outfit. It’s an oil and gas producer based in Adelaide. The stock has lost close to half its value in the past five years, and the company lost money in fiscal 2024 and 2025.
Contrarianism runs in my bloodstream, so I’m inclined to think the despised stocks will beat the adored ones in 2026. I’ll report the results in January 2027.
John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts, 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.
A High-Risk, Potentially High-Reward Way to Pick Stocks
Posted: January 06, 2026
January 5, 2026 – (Maple Hill Syndicate) – “There are simple answers, just not easy ones,” Ronald Reagan once said.
In stock investing, a simple, risky but surprisingly effective technique is to buy the cheapest stocks out there.
That’s the point of my Robot Portfolio, a hypothetical portfolio in which the stocks are chosen by a computer, not by judgment.
Over the past 27 years, this hypothetical portfolio has cumulatively returned 1461%, compared to 781% for the Standard & Poor’s 500 Total Return Index. On a compound annual basis, that’s 10.7% versus 8.4% for 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.
How It Works
My Robot starts with all U.S. companies with a market value of $500 million or more. It eliminates those with debt higher than stockholders’ equity (corporate net worth). It also eliminates companies that have been unprofitable in the latest four quarters.
Then it simply picks the ten stocks with the lowest price/earnings ratio (stock price divided by per-share earnings). These are deeply unpopular, out-of-favor stocks.
Over the years, the Robot has had major triumphs and tragedies. It showed a 97% return in 2009, 72% in 2013 and 67% in 2000. Conversely, it lost 61% in 2008, 31% in 2007 and 20% in 2018.
Obviously, this is a risky and volatile way to invest. The Robot picks some stocks I wouldn’t touch with a ten-foot pole. It picks others I like. Most importantly, it gets me to look at some stocks I would otherwise ignore.
New Lineup
Here’s the new Robot lineup for 2026.
The cheapest stock on the list is Fluor Corp. (FLR), an engineering and construction company based in Irving, Texas. It’s known for doing large projects, especially for the energy and chemical industries. The stock sells for about two times earnings.
Next-cheapest, at less than three times earnings, is Pursuit Attractions and Hospitality Inc. (PRSU). It offers glacier tours in Canada, Alaska and Iceland, with lodging and dining thrown in.
Eggs
Cal-Maine Foods Inc. (CALM), the largest U.S. egg producer, sells for three times earnings. Earnings can be volatile based on changes in egg prices and the price of corn (chicken feed).
Also at three times earnings is SM Energy Co. (SM) of Denver, Colorado. It produces oil and gas in Texas and Utah. Its fortunes have waxed and waned, but it’s doing well lately.
Back from last year’s list is Steel Partners Holdings LP (SPLP), which sells for less than four times earnings. It’s a publicly traded limited partnership with interests in industrial products, defense, energy, banking and youth sports.
Hawaiian Accent
Boyd Gaming Corp. (BYD) also trades for less than four times earnings. Unlike most casinos, it tries to cater especially to a Hawaiian clientele, in Las Vegas and other locations. You won’t find oxtail soup in most casinos but you will here.
Just a whisker over four times earnings is Civitas Resources Inc. (CIVI). It’s a Denver-based oil and gas company that drills mostly in Colorado. Based on the Altman Z-score, a measure of financial strength, this company is in distress.
In the same valuation zone is Lincoln National Corp. (LNC), the sixth-largest U.S. life-insurance company. Over the past decade, this stock has typically sold for nine times earnings.
A precious-metals dealer, ASA Gold and Precious Metals Ltd. (ASA), sells for a little over four times earnings. Recent price strength in gold and other metals should help this stock.
Completing the Robot roster is Rayonier Inc. (RYN) at 4.3 times earnings. It’s a real estate investment trust that owns more than two million acres of timberland.
A Bad Year
The Robot’s performance in 2025 was regrettable – a loss of 13.7% in a year when the S&P 500 returned 17.9%. Relative to the index, it was the Robot’s second-worst year ever (after 2007). In terms of absolute return, it was the fifth-worst year.
The majority of the Robot picks sank last year, with the worst losses coming from FMC Corp. (FMC, down 70%) and Vital Energy (VTLE, down 42%).
Clearly, this sort of investing is not for the faint of heart. Of course, you might be able to improve on the computer’s results by cherry-picking. But sometimes the most successful robot stocks are the ones that seem least likely.
I continue to believe in buying out-of-favor stocks. Stocks advance by beating expectations, and low expectations are easier to exceed.
Disclosure: I own call options on Fluor in a hedge fund I manage. I own Cal-Maine Foods personally and for most of my clients.
John Dorfman is chairman of Dorfman Value Investments LLC in Boston, Massachusetts, 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.