Six companies in 30-30 Club top picks in 2022

FEW players can make baseball’s 30-30 Club, players who hit 30 home runs and steal 30 bases in the same season.

I have a 30-30 Club for companies. To make it, a company with a market value of $2 billion or more must post a return on stockholders’ equity of 30 percent or better and boast earnings growth averaging 30 percent or more for the past five years.

Forty-seven companies made the roster this year.

My picks

Southern Copper Corp. (SCCO) mines copper and other metals in Peru and Mexico. I think the economy and inflation will both be running hot for the next year or so — a good environment for metals producers. The stock sells for 17 times earnings.

Medifast Inc. (MED) sells weight loss products, and I figure that a lot of people have a few extra COVID pounds to lose. The stock goes for 13 times earnings.

Housewares retailer Williams-Sonoma Inc. (WSM) sells for only 10 times earnings despite its outstanding profitability and growth.

Nexstar Media Group Inc. (NXST) looks like a bargain to me at nine times earnings. It owns 197 television stations.

Even more of a bargain at eight times earnings is Dick’s Sporting Goods Inc. (DKS).

Cheapest of all, at six times earnings, is Mueller Industries Inc. (MLI), which makes engineered products such as refrigerator coils. It earned a striking return on equity of almost 48 percent last year.

I consider anything over 15 percent good.

The honor roll

The largest stocks that achieved 30-30 status this year are Alphabet Inc. (GOOGL), Nvidia Corp. (NVDA), Adobe Inc. (ADBE), Netflix Inc. (NFLX) and Regeneron Pharmaceuticals Inc. (REGN).

Boasting the fastest fiveyear earnings growth are BioRad Laboratories Inc. (BIO), Fortinet Inc. (FTNT), Netflix, Gartner Inc. (IT) and Boise Cascade Co. (BCC).

Standing out for extremely high profitability were Fair Isaac Corp. (FICO), Sealed Air Corp. (SEE), Waters Corp. (WAT), NetApp Inc. (NTAP) and Artisan Partners Asset Management Inc. (APAM).

Missing in action

Amazon.com Inc. (AMZN) came excruciatingly close, missing the return-on-equity cutoff by less than 1 percentage point.

Apple Inc. (AAPL) is spectacularly profitable, but its earnings growth rate for the past five years is about 19 percent.

Meta Platforms Inc. (FB) missed both criteria by a whisker.

Microsoft Corp. (MSFT) just missed the cut with 27 percent earnings growth.

Tesla Inc. (TSLA) return on equity was 22 percent, and it hasn’t been profitable long enough for a five-year earnings growth rate to be calculated.

Full roster

In my 30-30 roster this year, but not mentioned above, are 26 other companies, listed below:

Atkore Inc. (ATKR), BJ’s Wholesale Club Holdings Inc. (BJ), Boot Barn Holdings Inc. (BOOT) Builders FirstSource Inc. (BLDR), Citrix Systems Inc. (CTXS), Commercial Metals Co. (CMC), D.R. Horton Inc. (DHI), Encore Wire Corp. (WIRE), and Evercore Inc. (EVR).

Also: Generac Holdings Inc. (GNRC), Group 1 Automotive Inc. (GPI), Hamilton Lane Inc. (HLNE), Lam Research Corp. (LRCX), Matson Inc. (MATX), Moelis & Co. (MC), Moody’s Corp. (MCO), OneMain Holdings Inc. (OMF), Pool Corp. (POOL), SLM Corp. (SLM), and Steel Dynamics Inc. (STLD).

Completing the list: Texas Pacific Land Corp. (TPL), Trinet Group Inc. (TNET), UFP Industries Inc. (UFPI), West Pharmaceutical Services Inc. (WST), World Wrestling Entertainment Inc. (WWE), and YETI Holdings Inc. (YETI).

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.