Some choice picks according to my Old Faithful paradigm

HERE are some new stocks to consider, spawned by my

Old Faithful stock-picking paradigm.

To pop up on this screen, a stock must:

■ Have a return on equity of 15 percent or better.

■ Have debt less than stockholders’ equity.

■ Sell for 15 times earnings or less.

■ Sell for two times revenue or less.

■ Sell for two times book value or less.

■ Show earnings growth averaging 10 percent or better over the past five years.

Intel Corp.

The largest stock that jumps these statistical hurdles is Intel (INTC), the largest U.S. semiconductor company by revenue.

Intel has not too much debt, a lot of cash, and good profitability. At less than 10 times recent earnings, I think Intel is a solid value.

D.R. Horton Inc.

Homebuilders have been whacked with a two-by-four over the past four months. Dr. Horton (DHI), the largest U.S. homebuilder, sold for more than $100 a share in December and has subsided to about $71.

High home prices and rising mortgage rates have raised questions about whether people can still afford to buy a new home.

Mortgage rates today are a bit above 4 percent. That’s high compared with a year or two ago. But rates were in the high 5 percent and low 6 percent range in 2005 and 2006, which were dandy years for homebuilders.

Lithia Motors Inc.

Based in Medford, Oregon, Lithia Motors (LAD) is one of the largest car dealership chains in the U.S., with some 278 locations. Lithia has shown a profit in 26 of the past 27 years, the sole exception being the infamous year of 2008.

Lately, its return on invested capital has moved above the 10 percent level — the level I want to see — and return on stockholders’ equity has been about 29 percent, which is quite high.

Timken Co.

Ball bearings, anyone? Timken (TKR) is the dominant U.S. producer of these industrial doodads.

Timken is a beaten-up stock — down 30 percent in the past 12 months. I think that investors are spooked away from cyclical and industrial stocks because they know that the Federal Reserve intends to raise interest rates several times this year.

In the past 30 years it has shown a profit 27 times. And I expect the economy to run hot for a while.

Capital One Financial Corp.

Investors are nervous about whether the rate curve will be satisfactory. That’s one reason why Capital One (COF) stock has barely moved from a year ago.

My guess is that the rate curve will stay OK. In any case, this bank stock looks attractive to me at five times earnings and less than book value.

The record

My Old Faithful selections from a year ago posted an 8.7 percent return, while the S&P 500 managed only a 3.4 percent gain. It was a mixed bag. Ingles Markets Inc. (IMKTA) did great, up 60 percent including dividends, while Green Brick Partners Inc. (GRBK) did very badly, down 24 percent.

My other three picks had single-digit returns. Allstate Corp. (ALL) was up 8 percent including dividends, Cigna Corp. (CI) returned 4 percent, and First American Financial Corp. (FAF) lost 5 percent.