The Perfect Stocks Portfolio: April 2025 Update

As the smoke clears from yet another round of tariff crossfire launched out of Washington, global stock markets are beginning to show a clear divergence. The United States, the self-appointed sheriff of global trade, has found itself in the midst of a self-inflicted financial riot.

Meanwhile, Europe and Japan are quietly picking up the pieces and, more importantly, the capital flows. If you are a U.S.-centric investor who thinks the world ends at the edges of the S&P 500, it might be time to pour another cup of coffee and think again.

It started, as it usually does these days, with a tweetstorm and a press conference.

President Trump, in full campaign battle mode, unveiled a sweeping set of tariffs under the banner of “Liberation Day.” Aimed squarely at China but hitting a wide array of goods from all over the globe, the result was immediate and vicious. The S&P 500 dropped 10% in just two sessions.

Big banks got bludgeoned.

Tech took a punch to the gut.

Even the midstream energy names—supposed bastions of stability—tumbled as the market priced in global slowdown risk.

For a brief moment, the White House offered a 90-day stay on some technology tariffs, and we saw a reflexive rally. But the next volley of 145% tariffs on Chinese imports slammed the brakes on that bounce in a hurry.

But while the U.S. market was putting on its best impression of a skydiver without a parachute, investors overseas found some shelter.

European markets, though initially rattled, showed signs of stabilizing. The DAX and FTSE found a footing, helped in no small part by the European Central Bank.

The ECB, led by Christine Lagarde and company, has made clear it will not sit idle. Six rate cuts in the past year—most recently down to 2.5%—demonstrate their willingness to step in with both feet. They've made it clear: if the Americans want to start a global trade war, Europe intends to defend its turf with liquidity and policy flexibility.

Japan, too, has shown it still knows how to play the long game. The Nikkei dipped just 2.8% following the initial announcement, but rallied 1.2% on news that electronics components would get a temporary tariff pass.

The Bank of Japan, under Governor Kazuo Ueda, has been more cautious than the ECB, but no less committed. While moving slowly toward policy normalization, the BOJ has stressed that it will watch the export fallout carefully and act if necessary. If anything, their measured approach is keeping volatility low and investor confidence relatively intact.

Here’s the part that should really have your attention: Europe and Japan are no longer just safe havens; they're increasingly becoming attractive destinations.

 European industrials, Japanese electronics and automation plays, and multinationals with global revenue streams but low U.S. exposure are beginning to outperform their American counterparts.

Central banks that still have room to cut, inflation that hasn't spiraled out of control, and valuation multiples that don't look like they were set by a caffeinated gambler at the craps table in Vegas.

That brings us to the Perfect Stock Portfolio—a curated basket of deeply undervalued and financially solid businesses.

This isn't your average global ETF basket.

The average Price-to-Tangible-Book in this portfolio is well below 1.0. These companies trade at a discount to their hard assets and deliver real cash flows. PE ratios are attractively low, with several names clocking in under 5.

 Dividend yields are also worth writing home about. A.P. Moller Maersk is throwing off a 14% yield. Even backing that out, the portfolio still averages north of 4%, far higher than the S&P's paltry 1.4%.

From a total return perspective, the Perfect Stock Portfolio is proving its mettle. Year-to-date returns on many of these names are smoking the broader U.S. indices. Commerzbank is up nearly 58%. Anhui Conch Cement is up 15%. Even conservative stalwarts like Kyocera are showing double-digit gains.

Over the last 3 to 6 months, the return profile is consistent with a bull market hiding in plain sight.

Investors should take note. The American dominance trade is wobbling. When policy is erratic and inflation sticks around longer than an unwelcome houseguest, money tends to look for better-behaved homes. In this case, that home may just be the quiet corners of Frankfurt or Tokyo, not Wall Street. In the spirit of deep value, we should go where capital is treated best. That might just mean shopping overseas.

There was a time when the only reason to look at Europe or Japan was as a hedge or a contrarian bet. That time is over. Now, it is simply smart portfolio construction. With central banks abroad showing they’re willing to fight for growth, and U.S. policymakers swinging a tariff bat like a drunk in a bar fight, it is hard not to like what you see in the calmer waters of international markets.

In short, the volatility in the United States has opened the door for the kind of opportunity we do not see every cycle. The American markets are priced for perfection in a world that is anything but. European and Japanese markets, meanwhile, are priced like the world is ending but positioned like it is not.

That's the kind of asymmetry deep value investors dream about.

Do not miss it.

In our rebalancing, due this month, we found that, in spite of the impressive performance, no stocks had yet appreciate to the point of excess where we would consider selling.

We do have an addition to the portfolio this month as we add to our Japanese positions.

If you have ever wondered what happens when a 150-year-old printing company decides to reinvent itself for the 21st century, look no further than Dai Nippon Printing Co., Ltd. DNPLY.

Founded in 1876, Dai Nippon Printing Co., Ltd began life as a traditional commercial printer. Today, it is a diversified powerhouse quietly powering everything from smartphone displays to food packaging, and even lithium-ion battery components. If you want a stable, innovative, and undervalued Japanese company to park some capital, this one deserves a deeper look.

Dai Nippon operates in three major business segments. First, there’s Smart Communications, which still includes books and magazines but has morphed into a full-service provider of digital content and marketing infrastructure. Then comes the Life & Healthcare segment, where DNP makes packaging for food, decorative materials, and products aimed at an aging population in Japan and abroad. Finally, there’s the Electronics segment—arguably its most exciting. This division produces optical films for displays, advanced photomasks for semiconductors, and pouches used in high-performance batteries. In other words, DNP is a critical, if overlooked, player in both the consumer tech and green energy revolutions.

Financially, DNP is in solid shape. For the fiscal year ending March 2024, the company reported revenue of ¥1.42 trillion (about $9.4 billion), with net income of ¥111.5 billion (about $738 million). That marked a healthy increase from the prior year. More importantly for the cautious investor, DNP’s balance sheet is pristine. It carries minimal debt, enjoys strong operating margins, and has ample liquidity. The interest coverage ratio is robust, and free cash flow remains consistently positive.

So how is the market treating this old-but-new Japanese stalwart? With a shrug, apparently. DNP trades at just 7.2 times earnings, and its market capitalization is hovering around ¥890 billion (about $5.9 billion)—a valuation that feels downright sleepy given the company’s positioning in growth sectors and rock-solid fundamentals. The stock yields modestly but reliably, and for investors concerned about currency risk, the yen’s current weakness actually makes DNP more attractive to dollar-based buyers.

DNP also has a respectable footprint in the U.S. through subsidiaries like DNP Imagingcomm America Corporation, which services industries ranging from retail to photography to logistics. The firm has been tactically expanding its overseas presence without overextending itself—a slow-and-steady strategy that matches its DNA.

The bottom line? DNP is a quietly excellent business, combining the consistency of a blue-chip industrial with exposure to tech and sustainability trends. It’s undervalued, underfollowed, and financially sound. In a world awash with speculative narratives, DNP is the sort of real business with real cash flow that deep value investors can appreciate. For anyone serious about Japanese equities, this name should be on your watchlist—or better yet, in your portfolio.

The stock trades at just 78% of book value and has a dividend yield of about 1.5%.

Dai Nippon Printing has a fortress balance sheet with a current ratio of over 2 and a debt-to-equity ratio of just .12.

I would not pay over $7.25 for shares initially and always prefer to buy on a down day.