Brought to you by Validea.com, the Buffett Screener is based on the book “Buffettology”. Warren Buffett is considered by many to be the greatest investor of all time. As the chairman of Berkshire Hathaway, Buffett has consistently outperformed the S&P 500 for decades. The Buffett strategy looks for stocks for an extremely long term horizon and combines both value and quality factors to identify stocks of companies with solid businesses and profitability and sound financials that trade at an attractive prices. Only stocks with consistent long term track records can pass this methodology. This screen is updated weekly. ValueWalk has a content agreement with Validea.
Users can access the full Buffett-based analysis, on any company below, as well as stock analysis, guru screens and model portfolio on Validea.com risk-free today. Watch a video demonstration of Validea’s Full Guru Screener.
Below are the criteria used in the Buffett Screener and details behind each value, quality and price factor. In the result table, stocks that score above 80% are consider investment ideas worth investigating further as these names pass the majority of the Buffett-based investment approach.
STAGE 1: Are the Fundamentals Sound?
- LOOK FOR EARNINGS PREDICTABILITY
Buffett likes companies to have solid, stable earnings that are continually expanding. This allows him to accurately predict future earnings. This model looks at 10 years of earnings.
- LOOK AT THE ABILITY TO PAY OFF DEBT
Buffett likes companies that are conservatively financed.
- LOOK FOR CONSISTENTLY HIGHER THAN AVERAGE RETURN ON EQUITY:
Buffett likes companies with above average return on equity of at least 15% or better, as this is an indicator that the company has a durable competitive advantage.
- LOOK FOR CONSISTENTLY HIGHER THAN AVERAGE RETURN ON TOTAL CAPITAL
Because some companies can be financed with debt that is many times their equity, they can show a consistently high ROE, yet still be in unattractive price competitive businesses. To screen this out, for non-financial companies Buffett also requires that the average Return On Total Capital (ROTC) be at least 12% and consistent.
- LOOK AT CAPITAL EXPENDITURES
Buffett likes companies that do not have major capital expenditures. That is, he looks for companies that do not need to spend a ton of money on major upgrades of plant and equipment or on research and development to stay competitive.
- LOOK AT MANAGEMENT’S USE OF RETAINED EARNINGS
Buffett likes to see if management has spent retained earnings in a way that benefits shareholders.
- HAS THE COMPANY BEEN BUYING BACK SHARES
Buffett likes to see falling shares outstanding, which indicates that the company has been repurchasing shares.
STAGE 2 of the Buffett Screener: Should I buy at this price?
- CALCULATE THE FUTURE STOCK PRICE & EXPECTED STOCK RETURN BASED ON THE AVERAGE ROE METHOD
- CALCULATE THE FUTURE STOCK PRICE & EXPECTED STOCK RETURN BASED ON THE AVERAGE EPS METHOD
- LOOK AT THE RANGE OF EXPECTED RATE OF RETURN
Model looks for stocks with a minimum of 12% return, but prefers stocks with 15% or more annual return potential based on the range of the two methods (ROE and EPS) method above.
Latest Update as of 02/23/2015.
|Ticker||Name||Buffett Model Score|
|TJX||TJX COMPANIES INC||100%|
|NOVKY||NOVATEK OAO – ADR||100%|
|ROST||ROSS STORES, INC.||100%|
|MNST||MONSTER BEVERAGE CORP||100%|
|FTI||FMC TECHNOLOGIES, INC.||100%|
|WIT||WIPRO LIMITED (ADR)||99%|
|PII||POLARIS INDUSTRIES INC.||99%|
|AHGP||ALLIANCE HOLDINGS GP, L.P.||94%|
|DLTR||DOLLAR TREE, INC.||93%|
|TSCO||TRACTOR SUPPLY COMPANY||93%|
|MTD||METTLER-TOLEDO INTERNATIONAL INC.||93%|
|CACC||CREDIT ACCEPTANCE CORP.||93%|
|FCFS||FIRST CASH FINANCIAL SERVICES INC||93%|
|HIBB||HIBBETT SPORTS, INC.||93%|
|CTSH||COGNIZANT TECHNOLOGY SOLUTIONS CORP||92%|
|TROW||T. ROWE PRICE GROUP INC||92%|
|ADS||ALLIANCE DATA SYSTEMS CORPORATION||92%|
|AAP||ADVANCE AUTO PARTS, INC.||89%|
|ADP||AUTOMATIC DATA PROCESSING||86%|
|PCP||PRECISION CASTPARTS CORP.||86%|
|SSL||SASOL LIMITED (ADR)||86%|
|GWW||W W GRAINGER INC||86%|
|NTES||NETEASE, INC (ADR)||86%|
|CHRW||C.H. ROBINSON WORLDWIDE, INC.||86%|
|JBHT||J B HUNT TRANSPORT SERVICES INC||86%|
|FDS||FACTSET RESEARCH SYSTEMS INC.||86%|
|CLB||CORE LABORATORIES N.V.||86%|
|FOSL||FOSSIL GROUP INC||86%|
|BMA||BANCO MACRO SA (ADR)||86%|
|WRLD||WORLD ACCEPTANCE CORP.||86%|
|CPSI||COMPUTER PROGRAMS & SYSTEMS, INC.||86%|
|NVO||NOVO NORDISK A/S (ADR)||85%|
|SAP||SAP SE (ADR)||85%|
|INFY||INFOSYS LTD ADR||85%|
|VTKLY||VTECH HOLDINGS LTD (ADR)||85%|
|FIZZ||NATIONAL BEVERAGE CORP.||85%|
|BRLI||BIO-REFERENCE LABORATORIES INC||85%|
|BTI||BRITISH AMERICAN TOBACCO PLC (ADR)||82%|
|COL||ROCKWELL COLLINS, INC.||82%|
|CPA||COPA HOLDINGS, S.A.||80%|
|MLAB||MESA LABORATORIES, INC.||80%|
|CHL||CHINA MOBILE LTD. (ADR)||79%|
|LMT||LOCKHEED MARTIN CORPORATION||79%|
|AMTD||TD AMERITRADE HOLDING CORP.||79%|
|CHKP||CHECK POINT SOFTWARE TECHNOLOGIES LTD.||79%|
|GPC||GENUINE PARTS COMPANY||79%|
|BBBY||BED BATH & BEYOND INC.||79%|
|VAR||VARIAN MEDICAL SYSTEMS, INC.||79%|
|FFIV||F5 NETWORKS, INC.||79%|
|JKHY||JACK HENRY & ASSOCIATES, INC.||79%|
|DCI||DONALDSON COMPANY, INC.||79%|
|URBN||URBAN OUTFITTERS, INC.||79%|
|PRAA||PRA GROUP INC||79%|