Warren Buffett Stocks: GOOGL Among 28 Stocks On This Screen

While the recent bear market has mauled tech stocks, Alphabet (GOOGL) and fellow IBD Long-Term Leaders Monolithic Power Systems (MPWR) and Cadence Design Systems (CDNS) maintain their spots on this screen of Warren Buffett stocks, which is based on the investing strategy of the Berkshire Hathaway CEO.

In addition to GOOGL, CDNS and MPWR from the tech sector, retail stocks Williams-Sonoma (WSM), Five Below (FIVE) and Boot Barn (BOOT) also make this stock screen featuring 28 companies.

Steel Dynamics (STLD) tops the list with a sustainable earnings growth rate of 59%. (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.)

Fellow steel stock Nucor (NUE) has also forged a position on the list.

Homebuilders D.R. Horton (DHI) and Green Brick Partners (GRBK) and Lennar (LEN) join decking materials firm Trex (TREX) on the screen.

Solar energy play Daqo New Energy (DQ) is also on the list.

Since the Oracle of Omaha has never written a book detailing his investment strategy, there’s no definitive buying checklist. But parts of his stock-picking strategy can be gleaned from the annual reports of Berkshire Hathaway (BRKB).

Highlighting Warren Buffett Stocks

The list below highlights Warren Buffett stocks like Alphabet, Cadence Design Systems and Steel Dynamics that are in sync with his focus on management quality and long-term growth.

Looking at the closely watched Berkshire Hathaway portfolio, Buffett and his team exited Merck (MRK) in Q3 of 2021, but opened a new position in the Keytruda cancer-drug maker in Q1.

Berkshire also added to top holding Apple (AAPL) in Q1. The conglomerate also grew its stake in Chevron (CVX) and placed a big bet on Occidental Petroleum (OXY), perhaps with expectations for oil prices to stay elevated.

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:

Top 25% of all stocks in terms of five-year annual EPS growth rate.
15% or greater sustainable earnings growth.
12% or better 5-year average return on equity.

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Warren Buffett Stocks: MarketSmith Screen

Screen created using MarketSmith | Data as of Aug. 16, 2022

Company	Symbol	Sustainable Growth %	ROE 5-Yr Avg	Comp Rating	EPS Rating	RS Rating	SMR Rating
Steel Dynamics Inc	STLD	59	30.3	97	98	92	A
Williams Sonoma Inc	WSM	55	45.6	87	96	84	A
Daqo New Energy Corp Ads	DQ	52	17	99	99	98	A
Nucor Corp	NUE	52	25.4	96	97	92	A
Quidelortho Corporation	QDEL	46	40	66	99	20	A
Expeditors Intl Wash Inc	EXPD	40	31.5	81	95	38	A
Kulicke & Soffa Ind Inc	KLIC	39	22.8	65	91	26	A
Boot Barn Holdings Inc	BOOT	38	21.7	61	92	15	A
Trex Company Inc	TREX	38	34.2	56	98	11	A
Cadence Design Systems	CDNS	35	33.5	99	97	95	A
Copart Inc	CPRT	30	28.2	98	95	81	A
Winnebago Industries Inc	WGO	30	23	95	97	81	A
D R Horton Inc	DHI	29	22.9	80	99	52	A
Alphabet Inc Cl A	GOOGL	29	20.3	76	89	45	A
West Pharmaceutical Svcs	WST	29	20.6	74	89	41	A
Five Below Inc	FIVE	28	20.7	56	76	18	B
Laboratory Corp Of Amer	LH	27	21.7	65	71	52	C
Old Dominion Fght Line	ODFL	27	22.8	97	98	84	A
Logitech Intl Sa	LOGI	26	32.8	23	64	17	C
Green Brick Partners Inc	GRBK	25	16.6	96	99	95	A
Meridian Bioscience Inc	VIVO	25	20	90	82	97	B
Epam Systems Inc	EPAM	24	20	92	97	83	A
Monolithic Power Systems	MPWR	23	25.8	99	99	92	A
Saia Inc	SAIA	23	16.1	91	99	60	A
Alpha & Omega Semicondtr	AOSL	21	17.6	84	91	90	A
Lennar Corp Cl A	LEN	18	14.7	80	98	60	A
Triton International Ltd	TRTN	18	16.6	94	96	87	A
Danaher Corp	DHR	16	13	94	91	87	A

Rating Potential Oracle Of Omaha Stocks

While using different criteria than those used for this list of Warren Buffett stocks, CDNS, MPWR and DQ stock, for example, score the highest-possible 99 Composite Rating. Copart (CPRT) holds a 98 rating, meaning it is outpacing 98% of all companies in terms of key stock-picking traits.

GOOGL stock currently has a 76 Composite Rating in Stock Checkup.

Including Alphabet and retailers Boot Barn and Five Below, many companies on the list do meet typical Warren Buffett criteria but do not meet some benchmarks 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.

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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