Now that beach season is upon us, it's time for the Perfect 10 Portfolio.

This isn't an homage to bathing beauties. It's a collection of ten stocks, each of which sells for 10 times earnings.

That's cheap. Over the years, most stocks have sold for about 15 times the company's earnings per share. In today's rich market, a multiple of about 24 is typical.

So, these are out of favor stocks. And those are exactly the kind of stocks I prefer. Stocks advance by exceeding expectations. If a stock is cheap, expectations are low, and therefore easier to exceed.

I've written about the Perfect 10 Portfolio 21 times before today. The average 12-monthly return on my Perfect 10 selections has been 18.4%. That compares quite nicely with the 10.9% return for the Standard & Poor's 500 Total Return Index over the same periods.

My Perfect 10 selections have beaten the index 12 times out of 21, and have been profitable 17 times.

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.

Now for this year's Perfect 10 Portfolio.

Dillard's

Are department stores dinosaurs? Investors believe so, which is why Dillard's Inc. (DDS, Financial) stock is cheap. Perhaps this chain, which operates in 29 states and has headquarters in Little Rock, Arkansas, should get more respect. Its return on stockholders' equity was 40% in the past four quarters.

D.R. Horton

D.R. Horton Inc. (DHI, Financial), with headquarters in Arlington, Texas, is the nation's largest homebuilder. I like this industry, since I believe there is a large pent-up demand for houses. Mortgage rates are a problem, but I believe we will see some relief on that front in six to 12 months.

EOG Resources

Based in Houston, EOG Resources Inc. (EOG, Financial) emerged from the wreckage of Enron Oil & Gas. But EOG is a more solid company than Enron ever was. Its market value is $72 billion, and its return on stockholders' equity is 27%, quite high. Over the past decade, it has typically sold for about 17 times earnings.

EZCorp

EZCorp (EZPW, Financial), which calls Rollingwood, Texas, home, operates more than 1,100 pawn shops in the U.S. and Latin America (mostly Mexico). Not a glamorous or trendy business. But this is an extremely cheap stock, selling for only 0.7 times book value (corporate net worth per share) and 0.8 times revenue.

Fox

Fox Corp. (FOX, Financial) is smaller than it was five years ago, having sold many of its operations to Disney. It still owns Fox News, Fox Business, 28 TV stations, a sports pay-tv operation and the streaming platform Tubi. After a long stretch of poor performance, the stock is showing some life this year.

Marine Products

Boats, anyone? Marine Products Corp. (MPX, Financial), based in Atlanta, is one of the larger makers of recreational boats in the U.S. I mentioned it recently in a column on stocks with high dividend yields. Its yield is 5.5%, and the company has no debt. Both are rare qualities these days.

M&T Bank

One of the nation's larger regional banks, M&T (MTB, Financial) hails from Buffalo, New York, and has branches in seven states in the eastern U.S. My favorite statistic for banks is return on assets, and I like that to be over 1.0%. M&T has exceeded the threshold in 13 of the past 15 years.

Miller Industries

Can a maker of tow trucks keep growing its sales and earnings? It seems like a mature industry, but Miller Industries Inc. (MLR, Financial), out of Ooltewah, Tennessee, has achieved earnings growth averaging 11% per year over the past decade. And its debt is low, only 15% of stockholders' equity.

Molson Coors

Beer consumption is declining in the United States. Sales in 2023 were probably the lowest in 24 years. Molson Coors Beverage Co. (TAP, Financial) stock is selling for about $51, down from a high of more than $100 in 2016. Nonetheless, sales and earnings ticked up last year. The stock is cheap by several measures.

Oshkosh

Oshkosh Corp. (OSK, Financial) has an unusual business mix: aerial work platforms, military trucks, fire engines and electric postal-delivery trucks. Over the past 10 years, the company has increased sales by more than 5% a year and earnings by more than 7% a year.

Last year

While my long-term record on the Perfect 10 Portfolio is good, last year wasn't. My picks rose a paltry 1.4% while the Standard & Poor's 500 Total Return Index advanced 25.7%.

Big losses in Heartland Express Inc. (HTLD, Financial) and Patterson-UTI Energy Inc. (PTEN, Financial) hurt the results. My only strong gainers were Apogee Enterprises (APOG, Financial) and Cavco Industries Inc. (CVCO, Financial).

John Dorfman is chairman of Dorfman Value Investments LLC in Boston, and a syndicated columnist. His firm or clients may own or trade securities discussed in this column. He can be reached at [email protected].