The CAPS Screen: 5 Warren Buffett Stocks

Warren Buffett made his vast fortune buying companies with wide and durable "moats" -- long-term, sustainable competitive advantages. His Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) 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 potentially Buffettesque opportunities, those highly profitable companies on which the CAPS investing community is the most bullish. Below are five companies with returns on equity above 15%.

They also have:

  • Market caps greater than $10 billion
  • Trailing three-yr EPS growth rate about 10%
  • Price-to-earnings multiple below 20
  • Four- or five-star ratings, the highest possible, from our CAPS community

Remember, in the first year for which we have data, four-star companies have outperformed with an average gain of 17%. Five-stars did even better.

Company

Share Price

Sector

Market Cap (in billions)

General Electric (NYSE: GE  )

$28.00

Conglomerates

$279.2

Honeywell (NYSE: HON  )

$50.86

Industrial goods

$37.7

Marathon Oil (NYSE: MRO  )

$43.53

Basic materials

$30.8

UnitedHealth Group (NYSE: UNH  )

$23.58

Health care

$29.0

China Petroleum & Chemical (NYSE: SNP  )

$96.95

Basic materials

$84.0

Data from Motley Fool CAPS and Yahoo! Finance as of July 17.

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 uncovering stocks with the biggest moats requires due diligence. Come and join us on Motley Fool CAPS to let the collective wisdom of our 110,000-strong CAPS community help you make your investment decisions.

For more Foolery:

Ilan Moscovitz doesn't own any of the companies mentioned in this article. Though green, round, and soft, apparently avocado is a fruit. UnitedHealth Group and Berkshire are Inside Value and Stock Advisor selections. The Motley Fool owns shares of Berkshire. Both fruit and vegetable, The Fool's superfood disclosure policy is good for the mind, body, and soul.


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