Ten choices make grade as favorites for new year

PFIZER, Walt Disney and D.R. Horton are among my favorite stocks for this year. As you tune up your portfolio for the 2021, here are 10 of my favorite stocks to consider:

Alphabet

Alphabet Inc. (GOOGL), the parent of Google, You Tube and Waymo, practices ceaseless innovation. The stock is fairly expensive, but this is the rare case where I’m willing to pay up for quality.

America’s Car-Mart

I hope I’m wrong, but I fear that the COVID-induced recession may outlast the pandemic. America’s Car-Mart Inc. (CRMT) sells used cars with car loans, mostly in the South and mostly to people with flawed credit ratings. It managed to stay profitable even in the Great Recession of 2007-09.

Berkshire Hathaway

You can buy Berkshire Hathaway Inc. (BRK.B) for 15 times earnings. That’s a bargain in a market where the median multiple is about 26. Berkshire owns about 60 companies outright plus slices of many others, including Apple, Geico and Coca-Cola.

Check Point

If computers play an increasingly central part in our lives, then cybersecurity is bound to be a growth area. That’s the specialty of Check Point Software Inc. (CHKP), an Israeli company that has achieved a return on equity above 15 percent for 25 years in a row. It is also debt-free.

D.R. Horton

As millennials reach child-bearing age, many of them will want single-family homes. D.R. Horton Inc. (DHI) is among the largest homebuilders, sells houses at a variety of price points and has a better balance sheet than most of its peers. The stock sells for only 12 times earnings.

Edwards Lifesciences

A lot of elective surgery has had to be postponed during the pandemic, so Edwards Lifesciences Corp. (EW) has seen its revenue growth slow to 6 percent from its usual 14 percent or so. Edwards makes artificial heart valves and other products for cardiac surgery. I think it will resume its usual growth pattern.

Pfizer

As the COVID-19 situation proves, Pfizer Inc. (PFE) can invent and mass-produce vaccines. If there is another pandemic someday, Pfizer probably will play an important role in ending it. The company sells some 312 drugs in the U.S., yields 4 percent in dividends and is consistently profitable.

Pioneer Natural

When I wade into a troubled industry, I seek a company with a strong balance sheet, and Pioneer Natural Resources Co. (PXD) qualifies, with debt only 30 percent of equity.

Walmart

I fear that hard economic times may linger even after the pandemic resolves. In tough times, people trade down to Walmart Inc. (WMT) from more expensive stores. I also like Walmart because it has the most advanced retail operation on the internet next to Amazon.

Walt Disney

Walt Disney Co. (DIS) has been on this list the past two years and has returned 33 percent and 21 percent. Propelled by the quick success of the Disney+ streaming service and by the likely reopening of theme parks and movie theaters post-vaccine, it will have another good year, I believe.

John Dorfman is chairman of Dorfman Value Investments LLC in Newton Upper Falls, 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.