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) 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 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 $5 billion.
- A trailing three-year earnings-per-share growth rate of about 10%.
- A price-to-earnings multiple of less then 25.
- Five-star ratings, the highest possible, from our CAPS community.
Remember, in the first year for which we have data, five-star companies have outperformed the S&P 500, with an average gain of 28%.
|
Company |
Share Price |
Sector |
Market Cap (in billions) |
|---|---|---|---|
|
Deere (NYSE:DE) |
$80.65 |
Industrial Goods |
$34.8 |
|
DuPont (NYSE:DD) |
$46.77 |
Basic Materials |
$42.1 |
|
Manitowoc (NYSE:MTW) |
$41.01 |
Industrial Goods |
$5.3 |
|
Transocean (NYSE:RIG) |
$142.52 |
Services |
$45.4 |
|
Valero (NYSE: VLO) |
$49.38 |
Basic Materials |
$26.1 |
Data from Motley Fool CAPS and Yahoo! Finance as of June 4.
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 105,000-strong CAPS community help you make your investment decisions.
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