Warren Buffett is one of the most respected investors in the world and his investment criteria are simple: Buy a growing business with inimitable assets at a reasonable price. Here are his criteria from his annual letter in detail:
(1) Large
purchases (at least $75 million of pre-tax earnings unless the business will
fit into one of our existing units),
(2) Demonstrated
consistent earning power (future projections are of no interest to us, nor are
“turnaround” situations),
(3) Businesses
earning good returns on equity while employing little or no debt,
(4) Management in
place (we can’t supply it),
(5) Simple
businesses (if there’s lots of technology, we won’t understand it),
(6) An offering
price (we don’t want to waste our time or that of the seller by talking, even
preliminarily, about a transaction when price is unknown).
It sounds simple
but often it is hard to find concrete stocks that could meet his restrictions.
Today I like to
close this gap by introducing some stocks that would appear on Warren Buffett's investing radar.
Principal Financial Group -- Yield: 2.74%
Principal Financial Group (NYSE:PFG) employs 14,873 people, generates revenue of $10,555.60 million and has a net income of $1,176.40 million. The current market capitalization stands at $15.06 billion.Principal Financial Group’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,742.40 million. The EBITDA margin is 16.51% (the operating margin is 14.16% and the net profit margin 11.14%).
Financials: The total debt represents 1.17% of Principal Financial Group assets and the total debt in relation to the equity amounts to 25.13%. Due to the financial situation, a return on equity of 11.18% was realized by Principal Financial Group.
Twelve trailing months earnings per share reached a value of $3.72. Last fiscal year, Principal Financial Group paid $1.28 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 14.09, the P/S ratio is 1.46 and the P/B ratio is finally 1.51. The dividend yield amounts to 2.74%.
Stock Charts:
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| Long-Term Stock Price Chart of Principal Financial Group (PFG) |
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| Long-Term Dividend Payment History of Principal Financial Group (PFG) |
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| Long-Term Dividend Yield History of Principal Financial Group (PFG) |
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H & R Block -- Yield: 2.34%
H & R Block (NYSE:HRB) employs 2,200 people, generates revenue of $3,024.30 million and has a net income of $500.10 million. The current market capitalization stands at $9.39 billion.H & R Block’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $944.48 million. The EBITDA margin is 31.23% (the operating margin is 25.24% and the net profit margin 16.54%).
Financials: The total debt represents 19.31% of H & R Block assets and the total debt in relation to the equity amounts to 58.24%. Due to the financial situation, a return on equity of 35.42% was realized by H & R Block.
Twelve trailing months earnings per share reached a value of $1.77. Last fiscal year, H & R Block paid $0.80 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 19.27, the P/S ratio is 3.11 and the P/B ratio is finally 6.02. The dividend yield amounts to 2.34%.
Stock Charts:
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| Long-Term Stock Price Chart of H & R Block (HRB) |
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| Long-Term Dividend Payment History of H & R Block (HRB) |
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| Long-Term Dividend Yield History of H & R Block (HRB) |
J M Smucker -- Yield: 2.23%
J M Smucker (NYSE:SJM) employs 4,775 people, generates revenue of $5,610.60 million and has a net income of $565.20 million. The current market capitalization stands at $11.75 billion.J M Smucker’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,210.40 million. The EBITDA margin is 21.57% (the operating margin is 16.38% and the net profit margin 10.07%).
Financials: The total debt represents 24.56% of J M Smucker assets and the total debt in relation to the equity amounts to 44.30%. Due to the financial situation, a return on equity of 11.02% was realized by J M Smucker.
Twelve trailing months earnings per share reached a value of $5.44. Last fiscal year, J M Smucker paid $2.32 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 21.12, the P/S ratio is 2.09 and the P/B ratio is finally 2.32. The dividend yield amounts to 2.23%.
Stock Charts:
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| Long-Term Stock Price Chart of J M Smucker (SJM) |
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| Long-Term Dividend Payment History of J M Smucker (SJM) |
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| Long-Term Dividend Yield History of J M Smucker (SJM) |
McCormick & Companies -- Yield: 2.12%
McCormick & Companies (NYSE:MKC) employs 10,000 people, generates revenue of $4,243.20 million and has a net income of $408.50 million. The current market capitalization stands at $9.66 billion.McCormick & Companies’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $720.90 million. The EBITDA margin is 16.99% (the operating margin is 14.21% and the net profit margin 9.63%).
Financials: The total debt represents 29.11% of McCormick & Companies assets and the total debt in relation to the equity amounts to 71.69%. Due to the financial situation, a return on equity of 23.51% was realized by McCormick & Companies.
Twelve trailing months earnings per share reached a value of $3.35. Last fiscal year, McCormick & Companies paid $1.48 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 22.53, the P/S ratio is 2.28 and the P/B ratio is finally 5.40. The dividend yield amounts to 2.12%.
Stock Charts:
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| Long-Term Stock Price Chart of McCormick & Companies (MKC) |
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| Long-Term Dividend Payment History of McCormick & Companies (MKC) |
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| Long-Term Dividend Yield History of McCormick & Companies (MKC) |
Hormel Foods -- Yield: 1.71%
Hormel Foods (NYSE:HRL) employs 20,400 people, generates revenue of $9,316.26 million and has a net income of $606.03 million. The current market capitalization stands at $15.44 billion.Hormel Foods’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,044.08 million. The EBITDA margin is 11.21% (the operating margin is 10.00% and the net profit margin 6.51%).
Financials: The total debt represents 4.58% of Hormel Foods assets and the total debt in relation to the equity amounts to 6.93%. Due to the financial situation, a return on equity of 17.43% was realized by Hormel Foods.
Twelve trailing months earnings per share reached a value of $2.30. Last fiscal year, Hormel Foods paid $0.20 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 25.45, the P/S ratio is 1.66 and the P/B ratio is finally 4.28. The dividend yield amounts to 1.71%.
Stock Charts:
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| Long-Term Stock Price Chart of Hormel Foods (HRL) |
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| Long-Term Dividend Payment History of Hormel Foods (HRL) |
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| Long-Term Dividend Yield History of Hormel Foods (HRL) |
Ralph Lauren -- Yield: 1.45%
Ralph Lauren (NYSE:RL) employs 14,000 people, generates revenue of $7,450.00 million and has a net income of $776.00 million. The current market capitalization stands at $12.00 billion.Ralph Lauren’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,391.00 million. The EBITDA margin is 18.67% (the operating margin is 15.17% and the net profit margin 10.42%).
Financials: The total debt represents 9.38% of Ralph Lauren assets and the total debt in relation to the equity amounts to 14.15%. Due to the financial situation, a return on equity of 19.85% was realized by Ralph Lauren.
Twelve trailing months earnings per share reached a value of $8.14. Last fiscal year, Ralph Lauren paid $1.70 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 16.97, the P/S ratio is 1.62 and the P/B ratio is finally 3.04. The dividend yield amounts to 1.45%.
Stock Charts:
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| Long-Term Stock Price Chart of Ralph Lauren (RL) |
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| Long-Term Dividend Payment History of Ralph Lauren (RL) |
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| Long-Term Dividend Yield History of Ralph Lauren (RL) |
Kansas City Southern -- Yield: 1.13%
Kansas City Southern (NYSE:KSU) employs 6,490 people, generates revenue of $2,577.10 million and has a net income of $504.30 million. The current market capitalization stands at $12.81 billion.Kansas City Southern’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,105.50 million. The EBITDA margin is 42.90% (the operating margin is 31.14% and the net profit margin 19.57%).
Financials: The total debt represents 28.62% of Kansas City Southern assets and the total debt in relation to the equity amounts to 61.67%. Due to the financial situation, a return on equity of 14.12% was realized by Kansas City Southern.
Twelve trailing months earnings per share reached a value of $4.55. Last fiscal year, Kansas City Southern paid $1.12 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 25.73, the P/S ratio is 5.01 and the P/B ratio is finally 3.45. The dividend yield amounts to 1.13%.
Stock Charts:
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| Long-Term Stock Price Chart of Kansas City Southern (KSU) |
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| Long-Term Dividend Payment History of Kansas City Southern (KSU) |
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| Long-Term Dividend Yield History of Kansas City Southern (KSU) |
BorgWarner -- Yield: 0.83%
BorgWarner (NYSE:BWA) employs 22,000 people, generates revenue of $8,305.10 million and has a net income of $687.50 million. The current market capitalization stands at $13.92 billion.BorgWarner’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,396.20 million. The EBITDA margin is 16.81% (the operating margin is 11.60% and the net profit margin 8.28%).
Financials: The total debt represents 18.54% of BorgWarner assets and the total debt in relation to the equity amounts to 37.06%. Due to the financial situation, a return on equity of 18.28% was realized by BorgWarner.
Twelve trailing months earnings per share reached a value of $2.86. Last fiscal year, BorgWarner paid $0.51 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 22.00, the P/S ratio is 1.72 and the P/B ratio is finally 3.95. The dividend yield amounts to 0.83%.
Stock Charts:
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| Long-Term Stock Price Chart of BorgWarner (BWA) |
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| Long-Term Dividend Payment History of BorgWarner (BWA) |
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| Long-Term Dividend Yield History of BorgWarner (BWA) |
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Related Stock Ticker Symbols:
HRL, PFG, BWA, KSU, RL, SJM, MKC, HRB
Selected Articles:
*I am long MKC. I receive
no compensation to write about these specific stocks, sector or theme. I don't
plan to increase or decrease positions or obligations within the next 72 hours.
For the other stocks: I
have no positions in any stocks mentioned, and no plans to initiate any
positions within the next 72 hours. I receive no compensation to write about
any specific stock, sector or theme.
