Stock Picks for June 2025

Stock Picks for June 2025

Today is June 6th, 2025 and it’s time for some new stock picks!

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Market Overview

Stock markets around the world have recovered very nicely since the April lows caused by trade war fears. Long term government bond yields continue to inch higher, due to potential continued inflation from tariffs as well as due to the continued deficit spending in the US. While it is not surprising that the US government is continuing to spend more money than what it collects from taxes and therefore has to borrow to make up the difference, it is disappointing that the Republican controlled congress is not able or willing to reduce spending, despite the efforts of the newly created Department of Government Efficiency (DOGE). In fact, the headlines made by DOGE and some of the absurd waste they uncovered brought attention to the magnitude of the deficit and debt problem the US government is facing: Foreign investors likely do not want to add as much to their holdings of US treasuries and are instead adding gold to their portfolios. The result is that the price of gold continues to go up.

With equity markets having gone up 15-20% since the lows of April it is harder now to find good buying opportunities. Having said that, we are still able to find some.

Genpact Ltd

My first stock pick for the next 12 months is Genpact Ltd, symbol G on the NYSE. Genpact is a General Electric spin-off. It is a provider of business process management services. Clients are industry verticals and operate in banking and financial services, insurance, capital markets, consumer product goods, life sciences, infrastructure, manufacturing and services, healthcare, and high-tech. Genpact’s largest market, in terms of revenue, is India, which is a high growth market, representing 52% of its total revenue.

This company has been consistently profitable over the last 10 years and was able to generate a median return on equity of 20%.

It trades at a reasonable 3 times book value and the company is buying back stock to the rate of 3.8% of outstanding shares per year, providing support for the share price and tax efficient return to its shareholders. I like it.

D.R. Horton Inc

My second stock pick the largest homebuilder in the US: D.R. Horton Inc., symbol DHI on the NYSE. D.R. Horton mainly builds single family detached homes across 36 states. It builds homes to entry-level, move-up and luxury buyers as well as seniors. The company also provides mortgage financing and title agency services through its financial services segment.

The US housing market suffers an inventory shortage as new home construction hasn’t kept up with growing demand over the last decade. This shortage is estimated to be in the 3-4 million homes but factors such as relatively high mortgage rates and concern about mass deportations of illegal immigrants are likely dissuading homebuilders from building enough homes to meet demand. The good news is large homebuilders like D. R. Horton know how to manage inventory and maximize returns for shareholders. They have seen the ups and downs of the residential real estate market and are able to manage their business quite well.

D. R. Horton has had very high profitability over the last 10 years:

Median return on equity of 18% over the last 10 years and it trades at only 1.6 times book value, which is I believe is still inexpensive. Having said that homebuilders cyclical and trade up and down with the economy so I expect the stock will experience a steep decline at some point but at this price I’m willing to own it and hold it through a recession when we get one.

Raymond James Financial Inc.

My third pick Raymond James Financial, symbol RJF on the NYSE. Raymond James is in a business that I know fairly well, the wealth management business. They operate in the US, Canada and the UK and have over $1.5 trillion in assets under administration. Their market capitalization is about 29 billion, which means the company is valued at about 2% on its customers’ assets. It has generated about 16% return on equity over the last 10 years which is very nice:

The stock is trading at about 2.4 times book value and in my estimation a more fair valuation would be around 3 times book value so there is decent upside if the valuation multiple improves. Even without a “multiple expansion” this stock should deliver double digit total returns for shareholders longer term. The company is also buying back stock at the rate of about 3.5% of the shares outstanding, offering downside support to the share price. I like this stock too!

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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