Which companies qualify as potential Warren Buffett stocks? Lululemon Athletica (LULU), Veeva Systems (VEEV) and Logitech International (LOGI) are among 12 stocks on this screen. LULU stock tops the list in terms of sustainable growth.
X
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).
Highlighting Warren Buffett Stocks
The list below highlights Warren Buffett stocks like Cadence Design Systems (CDNS), Lululemon, Veeva, Logitech and D.R. Horton (DHI) that are in sync with his focus on management quality and long-term growth.
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.
Pinpoint Top Growth Stocks With The Screen Of The Day
Investor’s Business Daily uses a different stock-picking strategy than Warren Buffett. Still, given their long history of strong and stable earnings growth, VEEV stock and CDNS stock are also on IBD Long-Term Leaders.
Additionally, Veeva and CDNS stock also make the IBD 50 list of top growth stocks.
Warren Buffett Stocks: MarketSmith Screen
Screen created using MarketSmith | Data as of Feb. 16, 2021
| Company | Symbol | Sustainable Growth % | EPS % Growth 5 Yr Pct Rnk | ROE 5-Yr Avg | EPS Rating | RS Rating | SMR Rating | Comp Rating |
|---|---|---|---|---|---|---|---|---|
| Lululemon Athletica | LULU | 38 | 83 | 31.2 | 87 | 39 | A | 82 |
| Cadence Design Systems | CDNS | 36 | 77 | 36.6 | 94 | 75 | A | 96 |
| Qualys Inc | QLYS | 30 | 90 | 18.8 | 95 | 23 | A | 50 |
| Keysight Technologies | KEYS | 29 | 75 | 26.9 | 86 | 72 | A | 89 |
| Logitech Intl Sa | LOGI | 24 | 87 | 41 | 99 | 87 | A | 99 |
| Mitek System Inc | MITK | 24 | 81 | 18.9 | 91 | 74 | A | 92 |
| Veeva Systems Inc Cl A | VEEV | 24 | 92 | 24.9 | 98 | 71 | A | 97 |
| Akamai Technologies Inc | AKAM | 22 | 75 | 17.5 | 88 | 10 | A | 57 |
| D R Horton Inc | DHI | 19 | 84 | 18.5 | 99 | 58 | A | 95 |
| Progressive Corp Ohio | PGR | 18 | 92 | 22.2 | 98 | 17 | A | 51 |
| One-800Flowers.com Cl A | FLWS | 18 | 81 | 17.1 | 91 | 74 | A | 91 |
| L3Harris Technologies | LHX | 15 | 79 | 33.6 | 88 | 5 | A | 48 |
Rating Potential Oracle Of Omaha Stocks
While using different criteria than used for this list of Warren Buffett stocks, Veeva, Logitech, DHI stock and CDNS stock all earn a passing score in Stock Checkup for their 95 or higher Composite Rating.
But some of the stocks on this list do not have a 95 or higher Composite Rating. Plus, others do meet typical Warren Buffett criteria, but do not meet some certain benchmarks CAN SLIM investors typically look for in the other IBD SmartSelect Ratings that gauge a company’s fundamental, as well as technical, strength.
Meanwhile, 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.
YOU MAY ALSO LIKE:
Zero In On The Best Stocks To Buy And Watch With The IBD Stock Screener
Warren Buffett Stocks: What’s Inside Berkshire Hathaway’s Portfolio?
Looking For The Best Stocks To Buy And Watch? Use With This Simple 3-Step Routine
Is Your Stock An A+ Or D-? Find Out Instantly With IBD Stock Checkup
Identify Bases And Buy Points With This Pattern Recognition Tool
