John Dorfman Columns category, Page 11

Lloyd Dawson, a retired farmer from LaVista, Neb., beat a strong field to win my 16th annual “Short Sellers Don’t Have Horns” short-selling contest. Short selling is a technique for profiting from a stock’s decline. It is difficult since the market rises more often than it falls. It is also...

A fat profit margin can signify one of several things. A company may have a big margin for two reasons. It may have first-mover advantage in a new field. Or it may provide something that people strongly want, whether that be a smartphone or a tasty chicken sandwich. Either way,...

Newton’s first law says that a body in motion will maintain a constant speed and direction, unless acted on by an outside force. Momentum investors think a similar law applies in the stock market. If a stock has advanced strongly in the past month, or the past 52 weeks, they...

“Scalpel please, nurse. Clamp … sponge.” A surgeon needs a variety of instruments. Investors should use a variety of tools, too. One tool is underutilized by individual investors is the price/cash-flow ratio. How cash flow works Cash flow attempts to measure the actual money coursing through the arteries and veins...

For more than two decades, I’ve been a value investor. In recent years, that’s been a handicap. Growth investors are running the table. Growth stocks have beaten value stocks in seven of the past 10 years, winning by a large margin in the past two years. The trend continued in...

Let’s hear it for the top line. The investing public worships at the bottom line — profits. But for sustained growth in profits, a company needs growth in the top line — revenue. You can’t cost-cut your way to riches indefinitely. Rapid revenue growth indicates public demand for a product...

A telescope is a fine instrument, but not if you need a microscope. In the stock market, as in science, there are different instruments for different purposes. For finding cheap stocks, the most common gauge is the price/earnings (P/E) ratio – a stock’s price divided by the company’s per-share earnings...

Perhaps the phrase “Perfect 10” makes you think of a beautiful woman, or a perfect score in gymnastics. Well, my Perfect 10 Portfolio is a little different. It consists of 10 stocks, each of which carries a price/earnings ratio (P/E) of 10. The P/E is simply a stock’s price divided...

How many efficient-market theorists does it take to screw in a light bulb? Punchline: None, because if the light bulb needed to be changed it would already have been done. The efficient market theory states that — since stock investors instantly incorporate all known information into stock prices — your...

I recommend about 250 stocks a year in this column, but usually hold only about 25 stocks in a typical client portfolio. Naturally, readers ask from time to time, “Well, what do you actually hold?” So, once a year in this column I report on the holdings in my firm’s...

Harold Hamm, 73, is a multibillionaire, a major Republican donor and a pioneer in shale drilling in the Bakken formation (located in North Dakota, Montana and adjacent parts of Canada). Hamm has a big appetite for the stock of Continental Resources Inc. (CLR), the oil-and-gas company he runs. He snapped...

When a stock jumps 50% or 100% in a year, you know something is afoot. Maybe the company is firing on all cylinders. Maybe the stock was radically mispriced a year ago. Perhaps both. Once a year, around this time, I select a few stocks that have exploded upward and...

Low debt is a characteristic I love when picking stocks. The low-debt stock list you are about to read is the 17th in a series, published pretty much every year in May. My picks in the first 16 low-debt lists have averaged a total return (including dividends) of 28.5% in...

My “Old Faithful” stock screen is one of my favorites. I’ve written 16 columns about Old Faithful, beginning in 1999. The average one-year gain has been 19.99%, compared to 6.33% for the Standard & Poor’s 500 Index over the same periods. Figures are total returns including dividends. Twelve of the...

What would happen if you bought the cheapest stock in each of the major stock market sectors? I’ve explored that question in 11 columns, from 2002 through 2006, and from 2013 to the present. I call this concept the Cheapskate Portfolio. I think it can be a way to find a...

Twenty-five Wall Street analysts cover International Business Machines Corp. (IBM) and 22 follow Pfizer Inc. If you invest in big, well-known stocks like these, it’s a challenge for you to see what others don’t. Your odds of finding an undiscovered gem are higher, in my opinion, in the realm of...

To join the 30-30 club in baseball, you have to hit 30 home runs and steal 30 bases in a season. Only 40 players have ever done it — stars such as Mookie Betts and Mike Trout. I have a 30-30 club for companies. It’s not as exclusive as baseball’s...

Biogen Inc. and Walgreens Boots Alliance head my Casualty List this quarter. The list is for stocks that have been slammed in the latest quarter, and that I think have potential to regain their losses and then some. Over the years, the Casualty List has averaged a 17.3 percent gain...

“What did everybody get wrong this year?” my wife asked me at breakfast Sunday. It was a good question. I’ve been running the Derby of Economic Forecasting Talent, or DEFT, more or less annually since 1999. Contestants must predict six economic variables — gross domestic product, inflation, the interest rate...

If you want an edge in investing, one path is to find companies whose stocks are cheap but whose profits are improving. I went hunting for some this weekend, and found a few, including Williams-Sonoma Inc. (WSM) and Movado Group Inc. (MOV). To qualify for consideration in today’s column, a...

The height of folly. That’s what I call it when people pay 100 times a company’s pre-share revenue to buy a stock. You see this behavior mostly with young biotechnology stocks and fledgling technology stocks. Investors mentally build what economics professor Burton Malkiel called “castles in the sky” when they...

In a stock market where momentum reigns, what’s a bargain hunter to do? One answer is to look for stocks that possess both value and momentum. Today, I offer four such stocks for your consideration. Applied Materials Let’s start with Applied Materials Inc. (AMAT), up 20 percent this year through...

No month has more stock-market lore associated with it than January. Yes, October is known as the haunt of crashes. But January is known for several things, including the “January effect” and the “January barometer.” The so-called January effect is really a confluence of three effects: • Most stocks tend...

A harsh December capped a hard fourth quarter for stocks. Many good companies have been knocked down, some to bargain levels. I’ve picked four of them for my Casualty List, a quarterly compilation of wounded stocks that I believe may recover strongly. The Casualty List has a profitable track record....