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The best-performing stocks in the market are usually the highest growing stocks or the stocks with the highest expected growth rates. This doesn’t mean that one should be invested in growth stocks and stay away from the value stocks at all times. Historically, value stocks managed to beat the growth stocks hand over fist. The reason is simple; value stocks are beaten down stocks with very low or negative growth expectations. Not surprisingly, it is easier for these stocks to beat the expectations on the average. On the other hand, everybody is extremely bullish about growth stocks and expects them to have higher growth rates in the future. Their stock prices also reflect this fact. Not surprisingly, it is more difficult for these stocks to beat these challenging expectations.

We ranked Buffett’s stock picks based on their expected five-year growth rates. The data source is from Yahoo Finance. Contrarian investors should look into the stocks that are at the top of the table.

Company

Ticker

Forward PE

Expected 5-Year Growth Rate

YTD Return

CONOCOPHILLIPS

(NYSE:COP)

7.46

-0.20

-3.15%

SANOFI AVENTIS

(NYSE:SNY)

7.48

1.09

6.48%

JOHNSON & JOHNSON

(NYSE:JNJ)

11.87

5.30

2.66%

COCA COLA CO

(NYSE:KO)

15.39

7.29

2.41%

TORCHMARK CORP

(NYSE:TMK)

7.13

8.29

-8.60%

PROCTER & GAMBLE

(NYSE:PG)

13.86

8.30

0.57%

M & T BANK CORP

(NYSE:MTB)

9.97

8.67

-14.98%

KRAFT FOODS INC

(KFT)

13.32

8.94

8.75%

WAL MART STORES

(NYSE:WMT)

10.79

9.14

-1.29%

U S BANCORP DEL

(NYSE:USB)

9.2

9.29

-9.57%

MOODYS CORP

(NYSE:MCO)

11.99

10.43

18.71%

WELLS FARGO & CO

(NYSE:WFC)

7.6

10.56

-18.87%

COSTCO WHOLESALE

(NASDAQ:COST)

20.62

10.80

10.26%

AMERICAN EXPRESS

(NYSE:AXP)

10.71

11.39

4.00%

WASHINGTON POST

(WPO)

19.04

34.00

-24.03%

ConocoPhillips (COP) is an American multinational energy corporation with its headquarters located in the Energy Corridor district of Houston, Texas in the United States. It lost 3.15% since the beginning of this year. It has a market cap of $88.35 billion and is expected to shrink over the next five years. Buffett invested more than $2 billion in COP shares. Bill Miller and D.E Shaw also had over $100 million position in COP shares. We think it is likely that COP will outperform the expectations over the next 5 years. We also like oil stocks because they are still in a long-term bull market.

Sanofi S.A. (SNY) is a multinational pharmaceutical company headquartered in Paris, France,with the world's fourth-largest by prescription sales. It returned 6.48% since the beginning of this year. It has a market cap of $89.5 billion and is expected to grow at a rate of 1.1% over the next five years. Warren Buffett invested $163 million in SNY shares. Ken Fisher held nearly $600 million in SNY shares.

Johnson & Johnson (JNJ) is an international American pharmaceutical, medical devices and consumer packaged goods manufacturer founded in 1886. It returned 2.66% since the beginning of this year. It has a market cap of $172.12 billion and is expected to grow at a rate of 5.30% over the next five years. Buffett invested $283 million in JNJ shares. Ken Fisher held over $600 million position in JNJ shares.

The Coca-Cola Company (KO) is an American multinational beverage corporation and manufacturer, retailer and marketer of non-alcoholic beverage concentrates and syrups. It returned 2.41% since the beginning of this year. It has a market cap of $150.14 billion and is expected to grow at a rate of 7.29% over the next five years. Buffett invested $13.5 billion in KO shares. Jim Simons held over $140 million positions in KO shares.

Torchmark Corporation (TMK) is a financial service holding company listed on the New York Stock Exchange. It operates through its wholly owned subsidiaries providing life insurance, annuity and supplemental health insurance products. It lost 8.60% since the beginning of this year. It has a market cap of $3.84 billion and is expected to grow at a rate of 8.29% over the next five years. Buffett invested $181 million in TMK shares. Jim Simons also held over $30 million in TMK.

Procter & Gamble (PG) is a Fortune 500 American Multinational Corporation headquartered in downtown Cincinnati, Ohio, and manufactures a wide range of consumer goods. It returned 0.57% since the beginning of this year. It has a market cap of $174.79 billion, and is expected to grow at a rate of 8.30% over the next five years. Buffett invested $4.9 billion in PG shares. D.E. Shaw and Ken Fisher held over $250 million in PG shares by the end of June. Jim Simons initiated a brand new $253 million in PG shares during the second quarter.

M&T Bank (MTB) is an American commercial bank that was founded in 1856 in western New York, and today remains headquartered in Buffalo at One M & T Plaza. It lost 14.98% since the beginning of this year. It has a market cap of $9.15 billion, and is expected to grow at a rate of 8.67% over the next five years. Buffett invested $472 million in MTB shares. Israel Englander increased his holdings in MTB by 12-fold.

Kraft Foods Inc.(KFT) is an American confectionery, food and beverage conglomerate. It returned 8.75% since the beginning of this year. It has a market cap of $59.27 billion and is expected to grow at a rate of 8.94% over the next five years. Buffett invested $3.5 billion in KFT shares. Bill Ackman had also $783 million in KFT at the end of June.

Source: Warren Buffett's Stock Picks With The Highest Upside Potential