Alphabet (GOOGL), Taiwan Semiconductor (TSM) and STMicroelectronics (STM) are among nine tech stocks on this screen emulating Warren Buffett stocks based on the investing strategy of the Berkshire Hathaway CEO. Cadence Design Systems (CDNS), Monolithic Power Systems (MPWR), Epam Systems (EPAM), Power Integrations (POWI) and Kulicke & Soffa Industries (KLIC) also join Google stock.
Note that inclusion on this screen does not necessarily mean the Oracle of Omaha owns shares in these companies. Rather, it identifies stocks in sync with Buffett’s focus on sustainable earnings growth and other factors.
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Google stock continues to show tight, healthy trading following a big jump after a strong beat of Q1 earnings estimates on April 25. Semiconductor powerhouse TSM’s stock continues to ride a post-earnings bounce, while STM stock sets up a potential breakout after retaking its 50-day moving average.
Meanwhile, IBD Long-Term Leader CDNS stock has climbed beyond buy range as MPWR, POWI and KLIC trade in or near buy zones.
These IBD 50 Stocks Are Coming Back To Life
Lululemon Stretches As Boot Barns Aims To Kick Off New Run
Outside of Google, TSM and the other tech names, Lululemon Athletica (LULU), Boot Barn (BOOT) and several other non-tech plays earn a spot on this screen emulating Warren Buffett stocks.
LULU stock has rebounded after flashing sell signals last month to return to its prior buy zone. BOOT stock is stomping toward an 88.80 buy point in a first-stage cup pattern.
Homebuilders PulteGroup (PHM), D.R. Horton (DHI), Green Brick Partners (GRBK), Lennar (LEN) and Tri Pointe Homes (TPH) also make the cut.
Elsewhere in the broad building sector, Tecnoglass (TGLS), Builders FirstSource (BLDR) and Atkore (ATKR) all fabricated a spot on the list.
Sustainable Earnings Growth In Focus
Building materials manufacturer Atkore tops the list with an impressive sustainable earnings growth rate of 90%. (The rate is computed by multiplying the company’s ROE by the earnings retention ratio, which is the percentage of earnings not paid out as dividends.)
Along with Atkore, the screen showcases four companies sporting a sustainable growth rate over 50%. The other three include Builders FirstSource, Cross Country Healthcare (CCRN) and solar energy play Daqo New Energy (DQ).
Another five have sustainable growth rates between 40% and 49%. Tecnoglass, Lululemon, Cadence Design Systems, Nucor (NUE) and Mueller Industries (MLI) hit that mark.
TSM, Google In Sync With Warren Buffett Stocks
Since the Oracle of Omaha has never written a book detailing his investment strategy, there’s no definitive buying checklist. But parts of Buffett’s stock-picking strategy can be gleaned from the annual reports of Berkshire Hathaway (BRKB).
In Q1, Berkshire disclosed its latest holdings, including buying Capital One Financial (COF) stock for the first time. Buffett and his team expanded three of the top five holdings, increasing ownership in Apple (AAPL), Occidental Petroleum (OXY) and Bank of America (BAC).
While this computer-generated stock screen is not a list of companies necessarily owned by Buffett or Berkshire, it highlights Warren Buffett stocks like Alphabet, Taiwan Semiconductor, Lululemon and Monolithic Power Systems in sync with Buffett’s focus on management quality and long-term growth.
Created in MarketSmith, the screen below emphasizes metrics to use when looking for companies with long-term past, and potential future, growth. To make the list, each stock must meet a wide range of criteria, including:
- In the top 25% of all stocks in terms of five-year annual EPS growth rate.
- 15% or greater sustainable earnings growth.
- 12% or better five-year average return on equity.
Build Your Watchlist With The IBD Stock Screener
Warren Buffett Stocks: MarketSmith Screen
Screen created using MarketSmith Data as of June 16
| Company | Symbol | Sustainable Growth % | ROE 5-Yr Avg | Comp Rating | EPS Rating | RS Rating | SMR Rating |
|---|---|---|---|---|---|---|---|
| Atkore | ATKR | 90 | 78.6 | 94 | 85 | 92 | A |
| Builders FirstSource | BLDR | 63 | 45.1 | 95 | 88 | 98 | B |
| Daqo New Energy | DQ | 61 | 30.1 | 43 | 88 | 16 | B |
| Cross Country Healthcare | CCRN | 52 | 27.4 | 65 | 67 | 82 | B |
| Tecnoglass | TGLS | 49 | 31.5 | 99 | 99 | 98 | A |
| Lululemon Athletica | LULU | 44 | 34.2 | 93 | 98 | 88 | A |
| Cadence Design Systems | CDNS | 43 | 36.1 | 98 | 96 | 93 | A |
| Nucor | NUE | 43 | 32 | 71 | 63 | 81 | B |
| Mueller Industries | MLI | 40 | 29.4 | 87 | 94 | 89 | B |
| Winnebago Industries | WGO | 36 | 26.6 | 82 | 64 | 85 | B |
| Expeditors International | EXPD | 34 | 36.2 | 78 | 67 | 80 | C |
| STMicroelectronics | STM | 34 | 22.1 | 96 | 97 | 88 | A |
| Commercial Metals | CMC | 33 | 23.7 | 87 | 94 | 81 | A |
| Old Dominion Freight | ODFL | 33 | 28.3 | 84 | 91 | 77 | A |
| D.R. Horton | DHI | 32 | 25.8 | 91 | 78 | 94 | B |
| Kulicke & Soffa Industries | KLIC | 32 | 25.6 | 84 | 47 | 85 | C |
| Monolithic Power Systems | MPWR | 31 | 29.3 | 98 | 98 | 84 | A |
| Green Brick Partners | GRBK | 30 | 20.7 | 98 | 93 | 99 | A |
| PulteGroup | PHM | 30 | 24.3 | 98 | 99 | 97 | A |
| MarineMax | HZO | 29 | 22 | 70 | 70 | 57 | B |
| Taiwan Semiconductor | TSM | 29 | 25 | 91 | 92 | 88 | A |
| Thor Industries | THO | 27 | 23 | 73 | 45 | 87 | C |
| Copart | CPRT | 26 | 26.3 | 93 | 96 | 94 | A |
| Boot Barn | BOOT | 25 | 20.6 | 84 | 84 | 77 | A |
| Epam Systems | EPAM | 24 | 20.6 | 48 | 89 | 10 | A |
| Alphabet | GOOGL | 24 | 22 | 93 | 75 | 87 | B |
| Owens Corning | OC | 24 | 20.4 | 95 | 87 | 94 | B |
| West Pharmaceutical Services | WST | 24 | 22.5 | 85 | 81 | 87 | B |
| Perion Network | PERI | 23 | 15.7 | 96 | 98 | 93 | A |
| Shutterstock | SSTK | 23 | 25.5 | 66 | 97 | 16 | A |
| Westlake | WLK | 23 | 17.4 | 66 | 50 | 75 | B |
| Tri Pointe Homes | TPH | 22 | 16.7 | 94 | 91 | 97 | B |
| Lennar | LEN | 21 | 17.3 | 92 | 72 | 94 | B |
| Diamondback Energy | FANG | 19 | 16.4 | 51 | 86 | 31 | B |
| Gerdau | GGB | 19 | 20 | 76 | 69 | 83 | C |
| Triton International | TRTN | 18 | 19.4 | 81 | 80 | 93 | B |
| Quanta Services | PWR | 17 | 14.5 | 93 | 87 | 91 | B |
| Danaher | DHR | 16 | 14.7 | 61 | 84 | 27 | B |
| Power Integrations | POWI | 16 | 19.3 | 86 | 54 | 84 | C |
| Archer Daniels Midland | ADM | 15 | 13.5 | 59 | 95 | 23 | B |
| Globant | GLOB | 15 | 14 | 89 | 96 | 71 | A |
Warren Buffett Stocks In Demand By Top Funds
The latest list of new buys by the best mutual funds features several names also highlighted in this screen of Warren Buffett-style stocks.
Copart (CPRT), Mueller Industries (MLI), PHM, MPWR and CDNS stock all make both lists.
IBD Stock Ratings Vs. The Oracle Of Omaha
IBD uses different criteria to build this screen emulating certain characteristics of Warren Buffett stocks, than Buffett generally uses. For example, IBD 50 stock Tecnoglass earns the highest-possible 99 Composite Rating.
TSM stock scores a 91 Composite. That rating means these leaders are outpacing at lest 91% of all companies in terms of key stock-picking traits.
Google stock continues its rebound following all the carnage in the tech sector last year, with its Composite Rating now standing at 93.
Many companies on the list do meet typical Warren Buffett criteria but do not meet some benchmarks that CAN SLIM investors seek in the other stock ratings that gauge a company’s fundamental, as well as technical, strength.
Ranging from 1 (worst) to 99 (best), the Composite Rating reveals how strongly a company is showing the seven telltale traits of winning stocks. For example, a rating of 95 means the company is outperforming 95% of all other stocks in terms of the most important fundamental and technical stock-picking criteria.
The EPS Rating tracks a company’s annual and quarterly earnings growth, then measures how its numbers stack up against those of all other stocks. So, just like the Composite Rating, a score of 95 means the company’s EPS growth is in the top 5% of all stocks.
Similarly, identifying stocks with strong fundamentals, the SMR Rating tracks sales growth, profit margins and return on equity as a whole. An A rating means the company is in the top 20% of all stocks in terms of those key fundamental performance metrics. Since it ties in with the legendary investor’s focus on a company’s fundamentals, this can be a particularly useful rating for investors looking for potential Warren Buffett stocks.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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