A Warren Buffett Stock Screen

One way in which to uncover stock investments is to run stock screens. Once resulting stocks are uncovered, one should track the performance of the screen before investing any real dollars. Additionally, conducting fundamental and detailed research on each stock is recommended before investing. The various stock screens from the American Association of Individual Investors cover a wide range of different investment strategies.

Below is a stock screen that incorporates many of Warren Buffett's criteria.

• Free Cash Flow greater than or equal to $250 million

• Profit Margin (ttm) greater than or equal to 15

• Return on equity greater than or equal to 15

• Market capitalization greater than or equal to $500 million

Additional screens applied:

• Dividend yield greater than .25%
• Earnings growth rate past 5-years greater than 10%
• S&P Earnings & Dividend Quality Ranking B or better. I did include a couple of non-rated stocks in the below list.

Full Screen View

With any stock screen output, this is simply a starting point for investors.

Disclosure: Direct or indirect long interest in MCD, PG, BDX, SLB, MON, BCR, SCHW

Comments

[DanielMiller:]

Very interesting. I created a stock screen that scans companies across 70+ parameters. I post the results on my website on the 1st of each month. Coincidentally, some of the top stocks in my screen are GRMN, COH, DO, ESV, SYK and TNH.

Aug 30 10:42 AM

[Owen:]

Diamond Offshore is publicly traded, but it is privately controlled by the Loews Corporation and the Tisch family, who own over 50% of the stock. Buffett would never buy shares in such a company, unless the controlling shareholder was interested in divesting their ownership.

I'm also surprised to see a criterion like dividend yield as part of the filter. This have never been part of Buffett's criteria. I also can't see him considering a stock with a P/E over 20 as a "reasonable price".

Howard Silverbatt, the S&P analyst who created the list, has absolutely no understanding of Buffett's decision-making process. Mentioning Warren's name in the title is a shameless attempt to plug his own, flawed analysis.

Aug 30 11:15 AM

[EddieTa:]

Thanks for the good article. It will be interesting to see if Buffett has been adding to Berkshire's P&G stake on the recent dips.

Aug 30 11:38 AM

[mkreisel:]

Buffett's most important criteria are:

1. Within his circle of competence, basically industries he could understand AND predict several years out;

2. Companies with enduring competitive advantages in industries with favorable economics, which require circle of competence in the first place to be identified;

3. Competent management with integrity;

4. A reasonable price for the stock.

All those "Buffett screens" merely looks for the least important Buffett criteria. You have to do the homework for the rest.

Aug 31 01:07 AM