Stock Picks for August 2025

Stock Picks for August 2025

Today is August 20th, 2025 and it’s time for some new stock picks!

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Market Overview

June was another good month for stocks with averages going up around 2%. Speculation in the capital markets remains rampant as evidenced by another record breaking month in cryptocurrencies like bitcoin. Valuations for stocks are high and the general economy is slowing down. Real GDP growth for advanced economies as predicted by the IMF is on pace to be only 1.4% in 2025, which would be the slowest growth since COVID and the lowest growth in the last 22 years, excluding the financial crisis of 2008-2009 and year of COVID, 2020. Source: https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/ADVEC

Governments around world however, are spending borrowed money at the rather high rate of 4.3% of GDP, meaning they are spending over and above what they are bringing in in tax revenue by significant amount. This liquidity is helping support the economy and the markets and is partly responsible for this speculative fervor, the rise in stock prices, gold, and cryptocurrencies. We expect this to continue.

Regardless of economic conditions it is normanly wise for investors to mostly ignore the economic indicators and focus on investing on good businesses whose shares are not overpriced and this is what we do:

Merchants Bank of Indiana

My first stock pick for the next 12 months is Merchants Bank of Indiana, symbol MBIN on the NASDAQ. Merchants Bank is a smaller regional bank with a market capitalization of about 1.5Billion dollars. It originates, holds and sells loans and mortgages. While they offer  wide variety of loans and banking and deposit products, they specialize in the multi-family mortgage sector.

Merchants Bank have done an phenomenal jot at growing their loan portfolio. They also grew shareholders’ equity from $150 million in 2015 to $2.2 billion in 2024. The company has generated an 18% average return on equity over the last 7 years or so yet the stock trades at below book value. If their past profitability continues into the near future we could see very high returns for shareholders! I like it!

Parker-Hannifin Corp

My second stock pick is Parker-Hannifin Corp., symbol PH on the NYSE. Originally Parker Appliance Company, usually referred to as just Parker, is an American corporation specializing in motion and control technologies. Its corporate headquarters are in Celevenand, OH.  The company was founded in 1917 and has been publicly traded on the NYSE since 1964. The firm is one of the largest companies in the world in motion control technologies, including aerospace, climate control, electromechanical, filtration, fluid and gas handling, hydraulics, pneumatics, process control, and sealing and shielding. Parker employs about 61,000 people globally.

This company is a very good example of a quality business with consistent and high profitability and a strong balance sheet. It generated a median return on equity of 21.5% over the last 10 years. It grew shareholder equity from $4.6 billion in 2016 to an estimated 13.7 billion in 2025 making shareholders very happy along the way! The stock is not cheap, trading at almost 7 times book value but sometimes you have to pay for quality and this is the case with this company.  We are hoping the company will continue its strong financial performance. The aerospace industry is very important for this company and with increased military budget in the US we are hoping they will do well, We’ll see.

Hubbell Inc.

My third pick is Hubbell Inc, symbol HUBB on the NYSE. Hubbell, Inc. engages in the designing, manufacturing, and sale of electrical and
electronic products for non-residential and residential construction, industrial, and utility applications and communications products. The company was founded by Harvey Hubbell II in 1888 and is headquartered in Shelton, CT.

Well run company that’s more than doubled its shareholders equity over the last 10 years while paying nice dividends along the way. It generated median return on equity of about 20%. Another good quality company. The stock is not cheap trading at 6.5 times book value but we are paying for quality again.

Give Us a Call

As always, if you have questions about whether these stocks fit in your portfolio or if you have any other investment-related questions, give us a call! 604-288-2084

Thank you!

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