Drawing from Mary Buffett’s insights in Buffettology, Validea’s Warren Buffett model captures Warren Buffett’s methodical, long-term investment strategy. At its core, the strategy seeks companies that demonstrate sustained excellence through strong earnings, prudent financial management, and exceptional returns for shareholders.
The strategy identifies companies that have proven their worth through consistent performance across several key metrics. A qualifying company must demonstrate predictable earnings growth over a full decade, with no negative years. It should maintain a robust return on equity, averaging at least 15% over ten years and never dipping below 10% in any single year.
For companies outside the financial sector, the strategy demands a ten-year average return on total capital of 12% or higher. Financial health is further verified through positive free cash flow, ensuring the company generates more cash than it consumes. Management’s effectiveness is measured by their ability to generate at least a 12% return on retained earnings, proving they’re investing shareholders’ money wisely.
Debt management is crucial – the strategy limits long-term debt to no more than five times annual earnings, ensuring companies maintain financial flexibility. Once a company meets these stringent criteria, the final step is to assess its market price, waiting for an attractive entry point that promises long-term value.
Discover how Validea’s Warren Buffett-inspired ‘Patient Investor’ strategy can help you identify high-quality, long-term investments even in changing market conditions. Visit Validea.com to access in-depth stock analysis and tools designed to emulate Buffett’s proven investment principles. Start investing like the Oracle of Omaha today!
This disciplined approach embodies Buffett’s famous patience and commitment to quality, focusing on established companies with proven track records rather than chasing short-term gains or market trends.
Here are the top ten highest scoring stocks according to Validea’s Buffett model for February 2025.
| Ticker | Company Name | Patient Investor | Price | Market Cap ($mil) | PE Ratio | Price/ Sales | Relative Strength | Price/ Book | Quality Percentile | Return on Equity | Return on Capital |
|---|---|---|---|---|---|---|---|---|---|---|---|
| AMAT | APPLIED MATERIALS INC | 100 | $180.35 | $146,571 | 21.0 | 5.4 | 62 | 7.8 | 4 | 40.6% | 36.2% |
| AX | AXOS FINANCIAL INC | 100 | $69.93 | $3,993 | 9.4 | 3.3 | 76 | 1.6 | 8 | 18.8% | 1,339.0% |
| GWW | WW GRAINGER INC | 100 | $1,062.67 | $51,752 | 27.3 | 3.0 | 67 | 14.0 | 4 | 56.0% | 44.5% |
| KNSL | KINSALE CAPITAL GROUP INC | 100 | $441.94 | $10,292 | 25.2 | 7.0 | 65 | 7.2 | 6 | 34.7% | 10.3% |
| LRCX | LAM RESEARCH CORP | 100 | $81.05 | $104,286 | 24.6 | 6.4 | 49 | 11.8 | 6 | 50.4% | 37.5% |
| MMC | MARSH & MCLENNAN COMPANIES INC | 93 | $216.88 | $106,488 | 26.5 | 4.4 | 64 | 7.9 | 9 | 31.6% | 66.7% |
| NVR | NVR INC | 93 | $8,016.18 | $24,142 | 15.8 | 2.3 | 64 | 5.7 | 7 | 39.2% | 684.1% |
| ITW | ILLINOIS TOOL WORKS INC | 93 | $259.16 | $76,530 | 22.4 | 4.8 | 56 | 22.6 | 2 | 108.1% | 72.6% |
| LPLA | LPL FINANCIAL HOLDINGS INC | 93 | $366.89 | $27,392 | 26.1 | 2.2 | 85 | 9.4 | 4 | 42.3% | 128.0% |
| CDW | CDW CORP | 93 | $199.14 | $26,538 | 24.3 | 1.3 | 41 | 11.3 | 11 | 53.4% | 70.7% |
Further Research
