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Who joins Alphabet (GOOGL), Meta Platforms (FB) (formerly known as Facebook), and Alibaba (BABA) on this list of Warren Buffett stocks based on the investing strategy of the Berkshire Hathaway CEO?
In addition to GOOGL, FB and BABA, Sprouts Farmers Market (SFM), Evercore (EVR), Teradyne (TER), and Williams-Sonoma (WSM) are among 21 names featured on this stock screen.
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Homebuilders D.R. Horton (DHI), Green Brick Partners (GRBK) and Lennar (LEN) also make the cut. West Pharmaceutical Services (WST) and Meridian Bioscience (VIVO) show up from the medical sector.
Joining Teradyne on the tech side, Epam Systems (EPAM), Qorvo (QRVO) and Monolithic Power Systems (MPWR) also lock secure placement on the screen.
Boot Barn (BOOT), Copart (CPRT) and solar energy play Daqo New Energy (DQ) also make the grade.
With their track records of sustainable growth, Alphabet, Epam, Copart, Monolithic Power Systems, and West Pharma also earn a spot on IBD Long-Term Leaders, fitting many of the parameters of Warren Buffett stocks.
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 Alphabet, West Pharma and Epam that are in sync with his focus on management quality and long-term growth.
Looking at the closely watched Berkshire Hathaway portfolio, Buffett and team have exited drugmaker Merck (MRK) and slashed holdings in AbbVie (ABBV) and Bristol Myers Squibb (BMY).
In Q4, Berkshire Hathaway bought shares in video game and esports leader Activision Blizzard (ATVI) for the first time.
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.
- 15% or greater sustainable earnings growth.
- 12% or better 5-year average return on equity.
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Warren Buffett Stocks: MarketSmith Screen
Screen created using MarketSmith | Data as of Feb. 23, 2022
| Company | Symbol | Sustainable Growth % | ROE 5-Yr Avg | Comp Rating | EPS Rating | RS Rating | SMR Rating |
|---|---|---|---|---|---|---|---|
| Evercore Inc | EVR | 58 | 45.5 | 74 | 94 | 31 | A |
| Teradyne Inc | TER | 41 | 31.2 | 77 | 95 | 31 | A |
| Williams Sonoma Inc | WSM | 40 | 45.4 | 59 | 96 | 24 | A |
| Sprouts Farmers Market | SFM | 37 | 26.8 | 87 | 79 | 91 | C |
| Meta Platforms | FB | 31 | 25.2 | 45 | 83 | 15 | A |
| Copart | CPRT | 30 | 28.2 | 84 | 97 | 42 | A |
| D.R. Horton | DHI | 29 | 22.9 | 64 | 98 | 33 | A |
| Alphabet | GOOGL | 29 | 16.8 | 86 | 96 | 77 | A |
| West Pharmaceutical Services | WST | 29 | 16.5 | 84 | 98 | 68 | A |
| One-800Flowers.com | FLWS | 27 | 18.2 | 24 | 54 | 8 | B |
| Qorvo | QRVO | 25 | 22.1 | 61 | 83 | 25 | A |
| Vipshop Holdings | VIPS | 25 | 22.6 | 38 | 75 | 17 | B |
| Meridian Bioscience | VIVO | 25 | 20 | 81 | 69 | 95 | B |
| Epam Systems | EPAM | 24 | 19.3 | 68 | 98 | 29 | A |
| Daqo New Energy | DQ | 22 | 17 | 62 | 95 | 13 | A |
| Alibaba Group Hldg | BABA | 21 | 19.8 | 39 | 82 | 17 | B |
| Monolithic Power Systems | MPWR | 21 | 24.2 | 97 | 95 | 81 | A |
| Green Brick Partners | GRBK | 20 | 13.5 | 70 | 95 | 38 | A |
| Lennar | LEN | 18 | 14.7 | 62 | 97 | 31 | A |
| Boot Barn Holdings | BOOT | 16 | 23.7 | 73 | 99 | 42 | A |
| T. Rowe Price | TROW | 15 | 27.8 | 57 | 90 | 21 | A |
Rating Potential Oracle Of Omaha Stocks
While using different criteria than that used for this list of Warren Buffett stocks, Monolithic Power, for example, has a strong 97 Composite Rating. GOOGL stock and Sprouts both earn an 87 rating, meaning they’re outpacing 87% of all companies in terms of key stock-picking traits.
After plummeting earlier this month on earnings, FB stock has seen its Composite Rating in Stock Checkup fall to 45.
Including FB stock and Alibaba, many companies on the list 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.
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.
Identifying stocks with strong fundamentals, 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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