Which companies qualify as potential Warren Buffett stocks? Lululemon Athletica (LULU), Veeva Systems (VEEV), Lululemon Athletica (LULU) and PayPal (PYPL) are among 15 stocks on this screen. Pool (POOL) tops the list in terms of sustainable growth.
Since the Oracle of Omaha has never written a book detailing his investment strategy, there’s no definitive buying checklist. But parts of his stock-picking strategy can be gleaned from the annual reports of Berkshire Hathaway (BRKB).
The list below highlights Warren Buffett stocks like Lululemon, Veeva, Pool stock and PayPal that are in sync with his focus on management quality and long-term growth.
Given their long history of strong and stable earnings growth, Pool stock and PayPal stock are both on IBD Long-Term Leaders. Veev stock is on the IBD Long-Term Leaders watchlist.
Created in MarketSmith, the screen below emphasizes metrics when looking for companies with long-term past and potential future growth. To make the list, each stock must meet a wide range of criteria, including:
- Top 25% of all stocks in terms of five-year annual EPS growth rate.
- Top 15% of all stocks in terms of sustainable growth.
- 20% or greater sustainable growth.
- 12% or better return on equity.
- 15% or greater sustainable EPS growth rate.
Investor’s Business Daily uses a different stock-picking strategy than the Oracle of Omaha. Still, as noted above, in addition to making this screen of Warren Buffett stocks, Pool stock and PayPal stock are on the IBD Long-Term Leaders.
Warren Buffett Stocks: MarketSmith Screen
Screen created using MarketSmith | Data as of Dec. 23, 2020
|Company||Symbol||Sustainable Growth %||EPS % Growth 5 Yr Pct Rnk||ROE 5-Yr Avg||EPS Rating||SMR Rating||Comp Rating|
|United Rentals Inc||URI||42||83||39.3||81||B||93|
|Enova International Inc||ENVA||39||88||26||98||A||95|
|Deckers Outdoor Corp||DECK||25||84||19||94||A||97|
|Mitek System Inc||MITK||24||77||17.3||93||A||97|
|Veeva Systems Inc Cl A||VEEV||24||92||24.9||99||A||84|
|Logitech Intl Sa||LOGI||23||82||31.5||99||A||99|
|Progressive Corp Ohio||PGR||22||90||22.2||99||A||86|
|PayPal Holdings Inc||PYPL||22||81||17.3||99||A||99|
|Old Dominion Fght Line||ODFL||19||82||19.2||90||B||77|
|D R Horton Inc||DHI||18||83||16.2||99||A||91|
|Bristol Myers Squibb Co||BMY||15||82||31.5||98||A||77|
Rating Potential Oracle Of Omaha Stocks
While using different criteria than used for this list of Warren Buffett stocks, PYPL, POOL and LULU stock all score a passing rating in Stock Checkup for their 95 or higher Composite Ratings.
But some of the stocks on this list do not have a 95 or higher Composite Rating. Plus, others do not meet some certain benchmarks CAN SLIM investors typically look for in the other IBD SmartSelect Ratings that gauge a company’s fundamental strength.
Ranging from 1 (worst) to 99 (best), the Composite Rating reveals how strongly a company is showing the seven telltale traits of winning stocks. For example, a rating of 95 means the company is outperforming 95% of all other stocks in terms of the most important fundamental and technical stock-picking criteria.
The EPS Rating tracks a company’s annual and quarterly earnings growth, then measures how its numbers stack up against those of all other stocks. So just like the Composite Rating, a score of 95 means the company’s EPS growth is in the top 5% of all stocks.
The SMR Rating tracks sales growth, profit margins and return on equity as a whole. An A rating means the company is in the top 20% of all stocks in terms of those key fundamental performance metrics. Since it ties in with the legendary investor’s focus on a company’s fundamentals, this can be a particularly useful rating for investors looking for potential Warren Buffett stocks.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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