Experienced mutual-fund investors should take the plunge into individual stocks -- but with all the calculation and precision of an Olympic dive, says a professor at the University of California, Davis. Richard Dorf of the campus's Graduate School of Management makes the case for the relatively lower costs and tax consequences of stocks vs. mutual funds in "Millennium Stocks," recently published by St. Lucie Press. The book uses a 12-step process to help readers build and maintain a diversified portfolio. Dorf helps investors identify their acceptable level of risk and offers a formula for assessing stocks with information available at most public libraries. The formula takes into account several factors including the return on capital and the growth rate of cash flow. Based on a score calculated using the formula, Dorf divides stocks into four classes distinguished by their growth of earnings, return on capital, price-to-earnings ratio and turnaround opportunity. An ideal portfolio, he says, is diversified by industry sector, risk, growth and value. But Dorf gives readers a head start too: he recommends 100 stocks based on their expected return on capital and growth of cash flows. The book also discusses tactics for buying and selling, global investing and preparing for market declines. Dorf is also author of "The New Mutual Fund Investment Advisor" and "The Mutual Fund Portfolio Planner: A Guide for Selecting the Best Funds for You in Today's Market."