Andrew Gillies of Forbes set out to find companies that fit the acquisition criteria of Warren Buffett. We don’t think the value in this exercise is that the famed investor might actually buy these companies and drive up their prices, but that you might mimic Buffett’s investing success by looking for some of the things he looks for.
Some of the characteristics Gillies searched for in coming up with candidates are consistent earnings power, good return on equity, low debt, and a low EV/EBITDA multiple.
Some of these companies are new to us, but Armor Holdings has caught our attention in the past. It has an 11.9 forward P/E, 14% insider ownership, and a strong record of year over year sales growth. Earnings have been boosted recently by increased defense spending, so make sure you believe in their sustainability before investing in the company.
AH 1-yr chart: