Welcome to the TOP 10 Stocks

Welcome to the very first entry of The Fair Value Journal’s TOP 10 Stocks! To kick things off let’s walk you through the framework, goals and rules behind the picks and overall this “portfolio”.

How This List Works

Every month, I review my latest company valuations to select the 10 best stock opportunities. This selection process balances two primary criteria:

• Undervaluation: How attractive the current market price is relative to our estimate of its intrinsic value.
• Allocation Rating: The quality of key fundamental metrics and future projections (e.g., Projected Revenue Growth, Average ROIC, Debt Rating, etc.)

As a result, a stock with exceptionally strong fundamentals and an higher Allocation Rating might rank higher than one with a slightly deeper discount but weaker underlying metrics.

Then I will allocate a percentage to that stock given its rating. At the end of the month we’ll check how each stock has done, if any stock is added or removed and our total performance.

Important Disclaimers & Ground Rules

• Not Financial Advice: This portfolio is primarily an exercise to track the real-world performance of my internal valuations. Always do your own research and take these ideas with a grain of salt.
• Diversification: For simplicity, this model tracks only 10 stock. For a robust real-world portfolio, a broader diversification of 20-40 stocks is generally recommended and personally is what I do for myself.
• Holding Periods & Price Lagging: In this model, stocks are re-evaluated monthly, meaning some may only be held for a single month. In reality, you would likely hold them longer or even shorter. Additionaly, rapid price movements within the month can cause temporary lagging. Always check the valuation date at the time of your reading to ensure the thesis still holds.

TOP 10 Stocks

Performance

* Performance data is not yet available for Month 1.

“Let the games begin…” Check back next month to see how this initial allocation performs!