The Bunny Portfolio, inspired by the Energizer Bunny’s enduring spirit, is a carefully curated selection of ten stocks known for rapid five-year earnings growth. Established over 23 years ago, the methodology behind the portfolio prioritizes companies with historical earnings growth exceeding 25% per year while maintaining an attractive price point of 12 times earnings or lower. This structure allows investors to potentially acquire high-growth stocks at undervalued prices, particularly when most market participants anticipate a downturn in earnings, thus creating lucrative investment opportunities. The portfolio operates purely on a formulaic basis rather than subjective judgment, ensuring that only those stocks exhibiting the best balance of growth and value are included.
Historically, the Bunny Portfolio has generated an impressive average return of 15.5%, outpacing the Standard & Poor’s 500 Total Return Index, which averaged 10.9% during the same periods. However, investors should exercise caution, as the results presented are hypothetical and may not reflect actual performance for individual clients. Throughout its history, 15 of the 23 Bunny Portfolios have yielded profits, with 11 portfolios successfully surpassing the S&P 500. As the 24th Bunny Portfolio is poised to be unveiled, it mirrors the ongoing quest for stocks that continue to thrive in challenging market conditions.
Among this year’s selected stocks is A-Mark Precious Metals, which specializes in the wholesale trade of precious metals and has seen its profits grow at an extraordinary rate of 63% per year over the past five years. Despite facing difficulties last year, the stock currently remains at approximately the same price level it held three years ago. Another notable inclusion is Academy Sports and Outdoors, which has exhibited remarkable profitability growth of around 86% per annum, alongside Atkore Inc., a manufacturer of industrial products, trading at a remarkably low seven times earnings.
Also returning to the Bunny Portfolio is Cal-Maine Foods, a leading egg producer in the U.S. known for its stability and dividend returns, despite its profits being influenced by factors like avian flu and feed prices. Conduent, which provides digital payment services, and Crescent Capital BDC, which focuses on financing mid-sized businesses, are included as they display promising growth potential. Additionally, Crocs Inc. stands out for its turnaround in profitability, moving from losses between 2014 and 2018 to six consecutive years of profit, while its stock remains attractively priced.
Further enriching the portfolio are First Citizens BancShares, with consistent profitability since 1992; Forestar Group, a homebuilder benefiting from rapid earnings growth and low valuation; and Merchants Bancorp, a financial institution with a track record of tripling its stock value over five years. Each selection reflects a keen balancing act of growth, valuation, and market conditions that aligns with the Bunny Portfolio’s core strategy of identifying companies with lasting potential.
Despite the well-conceived strategy and impressive historical performance, the past year proved to be challenging for the Bunny Portfolio, yielding only a 15.5% return compared to the S&P 500’s remarkable growth of 33.6%. Cal-Maine Foods led the pack with a substantial 104% return, while Albemarle Corp. fell 16%, emphasizing the unpredictable nature of stock performance. As always, personal disclosures indicate investor preferences in certain selected companies, reinforcing the importance of extensive research and due diligence even within a structured and historically successful investment framework.
