Who joins BABA stock this list of Warren Buffett stocks based on the investing strategy of the Berkshire Hathaway CEO?
In addition to Alibaba (BABA), Sprouts Farmers Market (SFM), Teradyne (TER), Hibbett (HIBB), Akamai (AKAM) and D.R. Horton (DHI) are also among 13 stocks featured on this stock screen.
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Green Brick Partners (GBRK) and Winnebago Industries (WGO) have secured a spot on the list.
IBD Long-Term Leader Cadence Design Systems (CDNS) also earns fits the parameters of a Warren Buffett stocks with its track record of sustainable growth.
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 BABA stock, Sprouts Farmers Market, Akamai, and Cadence Design Systems 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 increased exposure to consumer stocks while reducing drug stocks like Merck (MRK) and Bristol-Myers Squibb (BMY). Positions in Alibaba, Sprouts Farmers Market and 1-800-FLOWERS (FLWS) represent the consumer-focused holdings on this screen.
Showing stocks from a wide range of sectors, homebuilder D.R. Horton and semiconductor sector stock Teradyne also display characteristics of Warren Buffett stocks.
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 growth.
- 12% or better 5-year average return on equity.
Pinpoint Top Growth Stocks With The Screen Of The Day
Warren Buffett Stocks: MarketSmith Screen
Screen created using MarketSmith | Data as of Oct. 21, 2021
| Company | Symbol | Current Price | Sustainable Growth % | ROE 5-Yr Avg | Comp Rating | EPS Rating | RS Rating | SMR Rating |
|---|---|---|---|---|---|---|---|---|
| Alpha Pro Tech Ltd | APT | 6.21 | 58 | 21.6 | 24 | 56 | 3 | B |
| Teradyne Inc | TER | 117.17 | 40 | 31.2 | 66 | 90 | 25 | A |
| Sprouts Farmers Market | SFM | 22.39 | 37 | 26.8 | 49 | 74 | 20 | C |
| Cadence Design Systems | CDNS | 162.52 | 34 | 34.9 | 92 | 93 | 78 | A |
| Hibbett Inc | HIBB | 81.68 | 30 | 17.4 | 80 | 78 | 75 | A |
| Winnebago Industries Inc | WGO | 70.32 | 29 | 17.5 | 70 | 92 | 54 | B |
| One-800Flowers.com Cl A | FLWS | 29.4 | 27 | 17.1 | 62 | 80 | 56 | B |
| Akamai Technologies Inc | AKAM | 108.2 | 22 | 18.7 | 69 | 76 | 25 | A |
| Alibaba Group Hldg Ads | BABA | 178.47 | 21 | 18.8 | 52 | 92 | 8 | A |
| Perficient Inc | PRFT | 125.82 | 21 | 16.8 | 99 | 93 | 98 | A |
| Ciena Corporation | CIEN | 53.3 | 20 | 15.3 | 46 | 61 | 45 | C |
| Green Brick Partners Inc | GRBK | 23.94 | 20 | 13.5 | 84 | 93 | 56 | A |
| D R Horton Inc | DHI | 88.92 | 19 | 18.5 | 73 | 98 | 54 | A |
Rating Potential Oracle Of Omaha Stocks
While using different criteria than that used for this list of Warren Buffett stocks, global IT consulting firm Perficient (PRFT), for example, earns the highest-possible 99 Composite Rating. As Cadence Design Systems sets up a new base after pulling back in the recent stock market correction, it now has a 92 Composite Rating, just below a passing score of 95 in Stock Checkup.
Like CDNS stock, some 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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