If you could earn an obscene 50% annual return on your money, you could turn $10,000 into $1 million in just over eleven years. Poppycock? Well, Buffett once famously boasted he could do it-- provided he had less money.
That’s because his $35 billion cash hoard limits his options to a small number of large companies, like brewing giant Anheuser-Busch
But since we don’t share Buffett’s restrictions, I used our new CAPS screening tool to apply Buffett’s investing strategy to small- and mid-cap stocks. We're looking for companies whose strong profitability and growth indicates the presence of an economic moat. Below are five companies with returns on equity above 15%.
They also have:
- Market caps between $600 million and $2 billion.
- Trailing three-year EPS growth rate over 10%.
- Price-to-earnings multiple below 20.
- 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 28%.
Company |
Share Price |
Sector |
Market Cap |
---|---|---|---|
Chicago Bridge & Iron |
$33.02 |
Industrial Goods |
$3.2 billion |
Manitowoc |
$28.37 |
Industrial Goods |
$3.7 billion |
Middleby |
$49.99 |
Industrial Goods |
$848 million |
Grey Wolf |
$8.84 |
Basic Materials |
$1.6 billion |
Terex |
$50.12 |
Industrial Goods |
$5.1 billion |
Data from Motley Fool CAPS and Yahoo! Finance as of July 23.
Of course, finding great stocks doesn’t end with just a screen. A little due diligence will go a long way in your quest to be better than Buffett. 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.
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