Portfolio has modest but mighty stocks

GET out the carrots. It’s time for the Bunny to return. I have compiled the Bunny Portfolio almost every year since 1999. I named it after the Energizer Bunny of commercial fame, which is “still going” long after you expect it to run out of juice.

The stocks in my Bunny Portfolio sell for a modest 12 times earnings or less, though their earnings growth has averaged 25 percent or better in the past five years.

That can only happen if investors think the company is about to hit a wall. But people predict the future poorly. Therefore, I speculate that a good percentage of these stocks will be “still going” longer than most investors expect.

I set up the criteria for the Bunny Portfolio but I don’t choose the individual stocks in it. A computer program does that.

Here, listed alphabetically, are some Bunny stocks for 2018-19.

China Yuchai International Ltd. (CYD) manufactures diesel engines in China, though it’s incorporated in Bermuda and has its main office in Singapore. China has been one of the world’s fastest-growing countries in recent years.

A leader in private-label tissue paper is Clearwater Paper Corp. (CLW) of Spokane, Washington. It also produces paperboard and wood products. The stock sold for $74 a share in early 2015 but has fallen to about $27.

CVR Refining LP (CVRR) is a midsized refiner 80 percent owned by CVR Energy Inc. (CVI). Another owner of interest is financier Carl Icahn. When Icahn takes a stake, he agitates for changes that will raise the stock price.

If you are into sealing products, bearings, vacuum pumps and air compressors, EnPro Industries Inc. (NPO) might be your cup of tea. Perhaps fearing a recession, investors grant this stock a meager multiple of six times earnings. But all five analysts who cover it recommend it.

International Business Machines Corp. (IBM) is one of the largest computer companies in the world. Its stock sells for only eight times earnings, highly unusual for a company that used to be an investors’ darling.

Real estate trusts that invest in mortgages burned investors during the financial crisis of 2007-09. Many have vanished. A survivor is New Residential Investment Corp. (NRZ), based in New York.

Tenneco Inc. (TEN), based in Lake Forest, Illinois, makes auto parts. It’s been very profitable lately, but investors feel that growth is about to come to a halt, as the stock sells for a mere four times earnings.