In each of the past 17 Decembers I have selected and invested personally in 10 of the stocks we follow with the intention of holding for just one year. These are companies that I find especially attractive in light of their valuations or their potential to benefit from economic developments. I hold an equal dollar amount in each of the positions for the following year, and then I reinvest in the new list. The following is my Top Ten for 2025, listed in random order. As with last year’s list, this year leans to be perhaps a bit more defensive than in years past. Astute observers who have tracked my picks over the years may also note that the price-to-earnings multiples tend to be larger on this year’s list than on ones past. That is largely an artifact of the markets as a whole trading at multiples above historical averages. The Top Ten for 2025 consists of companies with fortress balance sheets, downside protection and upside opportunities. See Farr’s list of the top 10 stocks for 2044 Farr, Miller and Washington is a “buy-to-hold” investment manager, which means we make each investment with the intent to hold the position for a period of at least 3 to 5 years. The Top Ten list is a thought experiment, actively testing which stocks within our discipline will perform the best over the course of the next 12 months. It does not represent a complete equity portfolio, much less a complete investment portfolio; it is not a recommendation to buy or sell; it is a sample of what I am invested in across the breadth of my, my family’s, holdings. I will sell the names on the 2024 list on Dec. 31 and buy the 2025 names that afternoon. The reader should not assume that an investment in the securities identified was or will be profitable. These are not recommendations to buy or sell securities. There is risk of losing principal. Past performance is no indication of future results. If you are interested in any of these names, please call your financial advisor to discuss. With these disclaimers and qualifiers in place, here is the Top Ten list for 2025. I hope it will give you some insight into our decision- making process on investing. Donaldson (DCI) Founded in 1915, Donaldson is a global manufacturer of filtration systems and replacement parts for engines (on- and off-road trucks and heavy machinery for the transportation, construction, agriculture, and mining industries), industrial plants, power generation and various life sciences applications (bioprocessing, food and beverage, medical device, vehicle electrification, microelectronics and disk drives). DCI YTD line Donaldson performance Management runs the business for the LONG TERM, and so it has continued and will continue to invest in R & D and bolt-on acquisitions at the cost of some near-term profitability. However, the company’s balance sheet is very strong and free cash flow generally approaches net income on an annual basis. Lastly, the company has increased its dividend every year for the past 26 years, with the dividend increasing at a 13% rate since 2000. The stock trades at just 18x forward EPS, which is an 18% discount to the S & P 500 compared to an historical average of about a 24% premium. Valmont Industries (VMI) Valmont Industries is a relatively small company ($6.2 billion market cap) that manufactures engineered poles, towers and other structures for a number of different applications, including roads and highway safety, energy transmission, telecommunications, and access systems for construction sites. The company also produces mechanized irrigation systems and metal coatings for its own products as well as those of third-party customers. VMI YTD line Valmont year to date Despite our expectation of slower economic growth and a downturn in the North American agriculture sector, we see no change in the world’s need to continue investing in infrastructure, energy and agriculture. At about 17.3x forward EPS, we believe that patient investors could be well rewarded over time as investment spending continues. The company also offers a strong balance sheet and cash flow and a dividend yield of a bit under 1%. Danaher (DHR) Following the separation of its Environmental and Applied Solutions businesses on Sept. 30, 2023, Danaher became a pure-play biotechnology, life sciences and diagnostics company. The company’s evolution to its current state occurred through a long series of acquisitions and divestitures designed to generate shareholder value through the application of the company’s proprietary set of operating processes and tools it refers to as the Danaher Business System, or “DBS.” DHR YTD line Danaher year to date The company’s current set of businesses is characterized by a high level of recurring revenue, primarily through a direct sales model, and to a geographically diverse customer base. Its high-growth end markets, recurring revenue, strong free cash flow generation and excellent track record all contribute to a stock that is rarely cheap. However, its current P/E multiple of 27.6x forward EPS is not too far out-of-line with its peer group even though its current business mix should offer better growth prospects. Amazon.com (AMZN) Amazon is a leading player in three businesses that are supported by strong secular tailwinds: cloud computing, e-commerce, and digital advertising. Perhaps more importantly, each of these businesses possesses a wide economic moat. Amazon Web Services (AWS), the market leader in cloud infrastructure services, enjoys strong customer loyalty and benefits from high switching costs. Although AWS growth decelerated during the 2022 slowdown in the technology sector, the segment has recently seen an uptick in demand owing to renewed cloud migration efforts and new Artificial Intelligence (AI) workloads. AMZN YTD line Amazon year to date After more than two decades of non-stop reinvestment, AMZN is now a well-oiled machine, generating significant earnings and free cash flow. But while investments will remain elevated in the coming years, improved margins across the company should enable AMZN to compound earnings at a 15-20% annual clip. The stock isn’t cheap at 36.2x forward EPS, but premium growth often demands a premium earnings multiple. Finally, the company has an excellent balance sheet with a debt rating of AA (S & P) and negligible net debt (debt net of cash). Becton, Dickinson & Co (BDX) Becton Dickinson is a global supplier of medical devices, hospital supplies, diagnostic equipment, and medication management systems to hospitals and labs. Management estimates that 90% of patients who enter an acute care setting interact with at least one BDX product. Becton has faced a variety of company-specific headwinds in recent years that were exacerbated by the pandemic. However, most of these challenges are now behind them, and the company has made progress on initiatives aimed at streamlining its operations and supply chain. As a result, BDX is on track to return to its pre-COVID operating margins within the next 12 months. BDX YTD mountain Becton Dickinson year to date Moreover, the company has spent the past few years divesting its slower-growing businesses while pursuing several tuck-in acquisitions in higher-growth areas. Looking ahead, these efforts should allow BDX to consistently achieve its long-term growth algorithm of mid-single-digit organic revenue growth and low-double-digit EPS growth. BDX shares currently trade at 15.4x forward EPS – a significant discount to both the S & P 500 and its Medtech peers. The dividend yield is 1.8%. Microsoft (MSFT) Microsoft is one of the largest technology companies in the world. It has successfully pivoted from a Windows PC-first world to the cloud and is leading the way in generative Artificial Intelligence. The company is a strategic partner in enterprise digital transformations through its cloud, app and infrastructure, and artificial intelligence offerings. There is a long runway remaining for cloud growth as companies slowly deal with legacy investments that still drive value but are not cloud-based. MSFT is uniquely positioned to grow its wallet share of corporate IT budgets as it encounters new opportunities in security, compliance, and workflow. MSFT YTD mountain Microsoft year to date Shares trade at 31x forward EPS, and we think earnings may grow in the low-to-mid teens over the next several years. The premium valuation is justified given the above-trend growth, exposure to secular trends, and strong balance sheet. Visa (V) Visa is one of the world’s leading payments technology companies. It enables fast, secure, and reliable electronic payments across more than 200 countries and territories. The company continues to pursue its network-of-networks strategy, positioning it to be in the middle of everything as it connects networks across the globe. V YTD line Visa year to date Visa Direct is an example whereby the company enables account-to-account transfers using debit card credentials to enable all of the use cases just mentioned. Buy now-pay later has gained popularity, but up to 80% of those using such services pay off their balance using a debit or credit card, resulting in Visa revenue being as much as or greater than if the network had been used for the initial purchase. The company’s balance sheet is solid. Shares trade at 27.5x forward EPS and a 16% discount to Mastercard, which seems unwarranted. We expect EPS to grow in the double digits over the next several years. Alphabet (GOOGL) Alphabet is a holding company that owns several subsidiaries, with the most visible and profitable being the internet services giant Google. Google search is the world’s most popular search engine, and Android is the most widely used mobile phone operating software. Moreover, the company has seven products and platforms with more than two billion users – search, Gmail, Google Maps, YouTube, Chrome, Google Play Store, and Android. GOOGL YTD line Alphabet year to date Advertising dollars continue to shift to digital formats, and we think the company will be a leader in advancing Gen AI and integrating it into its products and services. The company has arguably the best balance sheet in the world with more than $115 billion in cash and investments (net of debt). Shares trade at about 22x forward EPS with double-digit earnings growth. There are risks around government regulation, but we see those developments taking years to play out. Adobe (ADBE) Adobe is a software company that has distinguished itself over the decades as a leader in creativity and digital transformation. Its portfolio spans a wide range of tools – from software for graphic design, video editing, and web development to advanced solutions for digital experience management. Nearly all creative professionals rely on Adobe’s Creative Cloud, and the industry is largely standardized around it. This provides the company with a wide moat and a large recurring subscription revenue stream. ADBE YTD line Adobe year to date Shares fell this month on guidance for the 2025 fiscal year that fell just shy of market expectations with growth tilted more towards new product introductions and new users as opposed to general pricing increases. The investor shortsightedness has the company trading at just 21.7x forward EPS for a company we think can grow earnings in the double digits over the next several years. Accenture (ACN) Accenture is a global leader in Information Technology (IT) services. The company’s business is split roughly evenly between Strategy & Consulting and Managed Services. The Consulting unit is more economically sensitive while Managed Services is comprised of larger long-term contracts that come out of backlog much more slowly. ACN YTD line Accenture year to date The company estimates that just 5-10% of companies are mature enough with their data to benefit from Generative AI at scale. Shares of Accenture are rarely cheap, but we see value at 27.5x forward EPS given its positioning as a partner of choice for firms wanting to modernize their systems and benefit from AI advancements.