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Featured Advisors
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Thursday November 01, 2012
by S&P Capital IQ, Standard & Poor's The Outlook Warren Buffett has earned a reputation as one of the preeminent value investors of all time. But how does Buffett make his picks? It is important to note these are not stocks Buffett has purchased or announced plans to purchase. They are simply stocks that meet the criteria that Buffett has emphasized in the past.
In short, Buffett uses these five investment criteria: - Free cash flow (net income after taxes, plus depreciation and amortization, less capital expenditures) of at least $250 million.
- Net profit margin of 15% or more.
- Return on equity of at least 15% for each of the past three years and the most recent quarter.
- A dollar’s worth of retained earnings creating at least a dollar’s worth of shareholder value over the past five years.
- Ample liquidity. Only stocks with a market capitalization of at least $500 million are included.
In the “Warren Buffett” portfolio, which is maintained by S&P Dow Jones Indices, which operates independently from S&P Capital IQ, one more criterion is added to eliminate overvalued stocks. Overpriced stocks are identified by comparing our five-year discounted cash flow (DCF) estimate with the current price. It is also important to note that not all of the stocks in the Buffett portfolio are covered by S&P Capital IQ equity analysts, and some that are covered are not recommended for purchase according to S&P Capital IQ’s fundamental analysis. (Editor's note from TheStockAdvisors: In The Outlook's original article, 34 stocks passed this S&P screen; below, we list only the 11 that passed this screen and also earn Standard & Poor's "buy" and "strong buy" ratings.)Year to date through September, the Buffett portfolio gained 11% vs. a 14.6% increase for the S&P 500 on a capital appreciation basis. Since inception on February 13, 1995 through February 29, 2012, the portfolio gained 513% vs. 199% for the benchmark. Past performance is no guarantee of future results. Based on this screen, these stocks might satisfy the “Oracle of Omaha.” Altera ( ALTR) Amgen ( AMGN) Apple ( AAPL) Baidu ( BIDU) Brown-Forman ( BF.B) Canadian Nat’l Railway ( CNI) Coca-Cola ( KO) Gilead Sciences ( GILD) Int’l Bus. Machines ( IBM) McDonald’s ( MCD) T.Rowe Price Group ( TROW) Taiwan Semiconductor Mfg. ( TSM) Learn more about this financial newsletter at S&P The Outlook.Related articles:
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News Flash
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Monday May 20, 2013
Express Scripts: Obamacare buy |
by J. Royden Ward, editor Cabot Benjamin Graham Value Investor
I am attracted to healthcare stocks because the confusion surrounding “ObamaCare” has held healthcare stock prices back. I think Express Scripts (ESRX) is very likely to shine in 2013.
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Monday May 20, 2013
Hodges: High conviction funds |
by Walter Frank, editor MoneyLetter
Over the last two months, Hodges Fund (HDPMX) has made a strong run to the top echelons of our domestic stock fund rankings. And one of its siblings, Hodges Small Cap (HDPSX) has been within the top decline of the small blend category from 2009 through last year, and is in the top 20% this year.
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Friday May 17, 2013
United Natural: A play on Whole Foods |
by Mark Skousen, editor Hedge Fund Trader Alert
We’ve recommended Whole Foods Market (WFM) from time to time, and the stock has moved up sharply in the past three years, but I’d like to suggest an alternative -- one of Whole Foods’ primary suppliers, United Natural Foods (UNFI).
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Thursday May 16, 2013
Timing expert eyes India |
by Sy Harding, editor Street Smart Report
The money flow and momentum reversals in India's Bombay Index have now been enough to trigger buy signals on intermediate-term indicators. With this new buy signal, we have added a position in the iShares India 50 ETF (INDY) to our portfolio.
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Wednesday May 15, 2013
Value investor goes with Guess |
by Charles Mizrahi, editor Hidden Values Alert
Guess?, Inc. (GES) is a holding in our special situation portfolio; its strong product quality has created brand name recognition and a loyal consumer following.
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Wednesday May 15, 2013
MGAM: Bingo, lotteries, casinos |
by Jim Oberweis, Jr., editor The Oberweis Report
Multimedia Games Holding Company (MGAM) makes innovative gaming systems for Native American and commercial casino operators in North America, lottery operators, and charity and commercial bingo operators.
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Tuesday May 14, 2013
Fidelity expert: Bowers' bond bets |
by Jack Bowers, editor Fidelity Monitor & Insight
If you’ve been worried that the bond market might take a big hit, you can relax. Indeed, while bond funds may lag stock funds over the next 5-10 years, they still have a decent shot at keeping up with inflation, and they remain an excellent way to cut risk in a blended portfolio.
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Tuesday May 14, 2013
Tesla: 'Out of the ball park' |
by Timothy Lutts. editor Cabot Stock of the Month
Tesla (TSLA), our previously featured Stock of the Month and our top stock pick for 2013, knocked the ball out of the park in its latest quarter. The company exceeded analysts' expectations on all counts: cars sold, revenues, earnings, gross margins and more.
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Monday May 13, 2013
5 ways to speculate on Cuba |
by Jim Powell, editor Global Changes & Opportunities Report
With the death of Hugo Chavez in March, and Venezuela’s economic decline, the heavily subsidized oil lifeline is likely to be cut or sharply reduced. I think the resulting energy squeeze will force Cuba to allow greater foreign trade and investment.
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Monday May 13, 2013
Big gains in nanotechnology? |
by Doug Fabian, editor Making Money Alert
The nanotechnology niche focuses on very small, even microscopic, technology. Nanotech has produced technological developments in medicine (lasers), electronics (ink jet systems) and biomaterials (chemical and bio-detectors).
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