The CAPS Screen: 10 Warren Buffett Stocks

By Ilan Moscovitz May 12, 2008 Comments (0)

8 Recommendations

Warren Buffett made his vast fortune buying companies with wide and durable "moats" -- long-term, sustainable competitive advantages. His Berkshire Hathaway (NYSE: BRK-B) conglomerate purchases companies that have the ability to keep competitors at bay and thus maintain unusually high levels of profitability.

With that in mind, I used our new CAPS screening tool to find out which highly profitable companies the CAPS investing community is the most bullish on. Below are 10 companies with returns on equity above 15%.

They also have:

  • Market caps greater than $5 billion.
  • A trailing three-year EPS growth rate over 10%.
  • Price-to-earnings multiples below 25.
  • Five-star ratings, the highest possible, from our CAPS community.

Remember, in the first year for which we have data, five-star companies outperformed with an average gain of nearly 28%.

Company

Share Price

Sector

Market Cap (in billions)

Cemex (NYSE: CX)

$28.51

Industrial goods

$21.4

Caterpillar (NYSE: CAT)

$81.76

Industrial goods

$50.3

Deere & Co.

$86.31

Industrial goods

$37.6

Manitowoc (NYSE: MTW)

$40.82

Industrial goods

$5.3

Noble

$62.62

Basic materials

$16.8

PepsiCo

$67.51

Consumer goods

$107.1

Petroleo Basileiro (NYSE: PBR)

$64.60

Basic materials

$283.4

Tata Motors (NYSE: TTM)

$15.96

Consumer goods

$6.2

Terex (NYSE: TEX)

$71.23

Industrial goods

$7.1

Transocean

$153.66

Basic materials

$48.8

Data from Motley Fool CAPS and Yahoo! Finance as of May 9.

But for Buffett, as for all smart investors, hunting for the most profitable investments doesn't end with just a screen. Like Sir Mix-a-Lot, he knows that finding the biggest moats requires due diligence. Come and join us on Motley Fool CAPS to let the collective wisdom of our 100,000-strong CAPS community help you make your investment decisions.

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