I’ve never seen the Old Faithful geyser in Wyoming. But I feel like it’s an old friend. I named one of my favorite stock-selection screens after it.
To appear on the Old Faithful list, a stock has to:
• Post good profits (15% return on equity)
• Have debt under control (debt less than stockholders’ equity)
• Be cheap (no more than 15 times earnings and two times book value)
• Show decent earnings growth (averaging at least 10% a year for the past five years)
Once a year for more than two decades, I’ve shared some recommendations drawn from the Old Faithful screen with readers of this column. Here are five I think are suitable for many investors now.
Toll Brothers
I like homebuilders because I think there’s tremendous pent-up demand for single-family homes. When the dam caused by today’s fairly high mortgage rates bursts, I think we’ll see a flood of home buying.
One homebuilder that seems timely to me is Toll Brothers Inc. (TOL), which caters to the upper prong of the K-Shaped economy. The average selling price for a Toll Brothers home is close to $1 million.
Upper-tier consumers are doing well, thanks partly to a buoyant stock market and Trumpian tax cuts. Toll Brothers shares sell for about 10 times earnings, an attractive multiple.
Hartford Insurance
A relationship with the American Association of Retired Persons (AARP) is one of the strengths of Hartford Insurance Group Inc. (HIG). It is the exclusive provider for the AARP auto insurance program. It also offers property and casualty insurance in the U.S. and overseas.
Profitability is strong, with a 22% return on equity in the past four quarters. The stock has almost doubled in the past three years but still sells for only 10 times earnings.
Ingredion
Ingredion Inc. (INGR). Based in Westchester, Ill., took its current name in 2012. Previously it was Corn Products International. It makes ingredients for food and animal feed, including starches, thickeners and sweeteners.
One of its more controversial products is high-fructose corn syrup, but it has reduced its reliance on that product line in recent years. The stock sells for only 10 times earnings and 1 times revenue — modest multiples by today’s standards.
Carter Bankshares
Of the 28 companies that passed the Old Faithful screen recently, Carter Bankshares Inc. (CARE) has the highest return on stockholders’ equity at 25%. (That’s profits as a percentage of corporate net worth.)
Carter Bank has 63 branches in Virginia and North Carolina. It had a major headache with a cluster of nonperforming loans issued to the Justice family (the family of Sen. Jim Justice, R-W.Va.). This year, it sold the loans, for about $289 million, cleaning up the bank’s balance sheet.
The buyer of those loans wasn’t disclosed. The transaction cut the bank’s ratio of nonperforming loans from more than 6% to well under 1%. The stock is up more than 50% in the past year but sells for a modest multiple, five times recent earnings.
Vital Farms
I recommended Vital Farms just a week ago, in a column about small-capitalization stocks. The company, based in Austin, Texas, sells pasture-raised eggs and butter. It has very little debt (only 15% of equity) and has increased sales at a 23% annual clip over the past five years.
The stock sells for about nine times recent earnings and less than 1 times revenue.
Performance
I’m quite pleased with the results of the 23 Old Faithful columns I’ve written from 1999 through a year ago. Of the 23 sets of recommendations, 17 have beaten the Standard & Poor’s 500 Total Return Index. Sixteen of the 23 have been profitable.
The average 12-month return on these picks has been 20.7%, compared to 8.9% for the index. All figures are total returns, including dividends.
Bear in mind that my column results are hypothetical and shouldn’t be confused with results I obtain for clients. Also, past performance doesn’t predict the future.
My picks from a year ago returned 59%, led by a 100.9% advance in Halliburton Co. (HAL). Oshkosh Corp. (OSK) returned 72%, and Southern Bancshares NC Inc. (SBNC) 39.4%.
For the same period (April 28, 2025, through April 24, 2026), the S&P 500 total return was 31.2%. My only pick from a year ago that trailed the index was Cincinnati Financial Corp. (CINF) with a return of 23.8%.
Disclosure: A hedge fund I manage owns Oshkosh. I own Toll Brothers for one client. Two of my family members own Ingredion.