Warren Buffett Stocks: FB, GOOGL Among 25 Names On This Screen
While the recent bear market has mauled tech stocks, Alphabet ($Alphabet(GOOGL)$) and Meta Platforms ($Meta Platforms, Inc.(META)$) (formerly known as Facebook) maintain their spots on this screen of Warren Buffett stocks based on the investing strategy of the Berkshire Hathaway CEO.
In addition to GOOGL and FB, retailers Williams-Sonoma (WSM), Sprouts Farmers Market ($Sprouts Farmers(SFM)$), Five Below ($Five Below(FIVE)$), The Container Store ($Container Store(TCS)$), One-800Flowers.com ($1-800-Flowers.com(FLWS)$), and Boot Barn ($Boot Barn(BOOT)$) also make this stock screen.
Steel Dynamics ($Steel Dynamics(STLD)$) tops the list with a sustainable earnings growth rate of 59%. (The rate is computed by multiplying the company's ROE by the earnings retention ratio, which is the percentage of earnings not paid out as dividends.)
Fellow steel stocks Nucor ($Nucor(NUE)$) and Reliance Steel & Aluminum ($Reliance Steel & Aluminum(RS)$) have also forged a spot among the 25 names featured on this stock screen.
Homebuilders D.R. Horton ($D.R. Horton(DHI)$), Green Brick Partners ($Green Brick Partners(GRBK)$) and Pulte Group ($PulteGroup(PHM)$) join decking materials firm Trex ($Trex(TREX)$) on the list.
Along with Meta and GOOGL stock, Monolithic Power Systems ($Monolithic Power(MPWR)$) and Epam Systems ($EPAM Systems Inc(EPAM)$) have also found a spot on this screen for Warren Buffett stocks even with the market taking its toll on the tech sector.
With their track records of sustainable growth, Monolithic Power Systems and GOOGL stock 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 ($Berkshire Hathaway(BRK.B)$).
Highlighting Warren Buffett Stocks
The list below highlights Warren Buffett stocks like Alphabet, Nucor and Steel Dynamics that are in sync with his focus on management quality and long-term growth.
Looking at the closely watched Berkshire Hathaway portfolio, Buffett and his team exited Merck ($Merck(MRK)$) in Q3 of 2021, but opened a new position in the Keytruda cancer-drug maker in Q1.
Berkshire also added to top holding Apple ($Apple(AAPL)$) in Q1. The conglomerate also grew its stake in Chevron ($Chevron(CVX)$) and placed a big bet on Occidental Petroleum ($Occidental(OXY)$), perhaps with expectations for oil prices to stay elevated.
Created in MarketSmith, the screen below emphasizes metrics to use 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.
Rating Potential Oracle Of Omaha Stocks
While using different criteria than that used for this list of Warren Buffett stocks, Daqo New Energy (DQ), for example, scores a 97 Composite Rating, as does Steel Dynamics. Epam's 86 Composite Rating means it is outpacing 86% 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 41. GOOGL stock has slipped to a 67 rating.
Including FB and GOOGL stock, many companies on the list do meet typical Warren Buffett criteria, but do not meet some 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.
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