Warren Buffett is one of the greatest investors, stock pickers, and CEOs of our time.
There are some intangible things he looks for that you can’t put in a stock screener.
- When buying a stock he sees it as buying a business and he wants to buy future consistent cash flows for a discounted price.
- He wants the company to have high quality management and a competitive edge that is not easy to reproduce.
- He wants a company with a business that has a high barrier to entry for new competitors.
- The ability of a company to both maintain and grow earnings and dividends without the help of debt.
- A company that has a type of monopoly with their technology, business model, or brand strength.
- Pricing strength that can keep up with inflation.
There are also some quantifiable fundamentals that you can put in a stock screener from Mary Buffett’s book Buffetology.
- Market Capitalization is >= $300 million U.S.
- Current Operating Margin % is >= industry’s current median.
- Current Net Margin % is >= industry’s current median.
- 3 year earnings per share growth % from operations is >= 7 year earnings per share growth % from operations.
- Latest filing return on equity % is > 12%.
- 7 year average return on equity % is > 12%.
- Long term debt < 5x earnings.
- Take the top 50 stocks with the highest 7 year earnings per sales growth % from operations.
This stock screen can help you find stocks that even Warren Buffett would buy and hold, hopefully forever, if their fundamentals don’t change.