Warren Buffett’s approach to investing centers on a lesson refined across many years: purchasing excellent companies at reasonable prices beats buying average ones at steep discounts. He seeks businesses with lasting competitive strengths—what he calls “economic moats”—capable of producing strong returns over extended periods. Rather than following market trends or chasing speculation, Buffett targets firms led by skilled management teams that reliably produce earnings and cash, bought at rational prices.
The Validea Warren Buffett model transforms these timeless ideas into a structured method for finding exceptional companies. Based on insights from Mary Buffett’s Buffettology, this quantitative approach converts Buffett’s principles into specific financial criteria meant to identify businesses with enduring competitive power and dependable performance.
The foundation of the model requires consistent earnings: a minimum of ten consecutive years showing profits, with no annual losses permitted. This mirrors Buffett’s attraction to companies that stay profitable regardless of economic conditions.
Performance benchmarks are equally demanding. Businesses must achieve an average return on equity of at least 15% across ten years, never falling below 10% in any single year. For non-financial companies, average returns on total capital must exceed 12%, confirming that management deploys resources wisely.
Balance sheet stability provides another essential screen. Companies must produce positive free cash flow, and their long-term debt cannot surpass five times yearly earnings, protecting financial soundness. Management capability is assessed through how well they deploy retained earnings—demanding at least 12% returns on these funds to demonstrate thoughtful capital decisions.
Only once these demanding quality standards are satisfied does price consideration enter the equation. Consistent with Buffett’s thinking, the model stresses discipline—seeking chances to acquire outstanding businesses at sensible prices instead of chasing speculative plays or riding market momentum.
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!
Here are the top ten highest scoring stocks according to Validea’s Buffett model for October of 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 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| ADP | AUTOMATIC DATA PROCESSING INC | 100 | $293.50 | $118,894 | 29.4 | 5.8 | 61 | 19.2 | 1 | 76.0% | 66.6% |
| AMAT | APPLIED MATERIALS INC | 100 | $204.74 | $163,105 | 24.4 | 5.7 | 57 | 8.4 | 5 | 35.6% | 39.3% |
| GWW | WW GRAINGER INC | 100 | $952.96 | $45,582 | 24.0 | 2.6 | 44 | 12.4 | 4 | 55.3% | 42.3% |
| NTES | NETEASE INC (ADR) | 100 | $151.99 | $96,240 | 20.3 | 6.3 | 85 | 4.6 | 2 | 24.4% | 21.8% |
| NVO | NOVO NORDISK A/S (ADR) | 100 | $55.49 | $183,565 | 14.2 | 3.7 | 17 | 9.3 | 1 | 79.2% | 89.2% |
| NEU | NEWMARKET CORP | 100 | $828.21 | $7,782 | 16.4 | 2.8 | 83 | 4.8 | 7 | 33.6% | 29.5% |
| PAYC | PAYCOM SOFTWARE INC | 100 | $208.14 | $11,709 | 28.2 | 6.0 | 73 | 6.5 | 1 | 25.8% | 26.4% |
| SFM | SPROUTS FARMERS MARKET INC | 100 | $108.80 | $10,633 | 22.4 | 1.3 | 50 | 7.8 | 10 | 36.9% | 26.1% |
| TSCO | TRACTOR SUPPLY CO | 100 | $56.87 | $30,138 | 28.0 | 2.0 | 49 | 12.1 | 8 | 45.3% | 20.0% |
| ITW | ILLINOIS TOOL WORKS INC | 96 | $260.76 | $76,012 | 22.9 | 4.8 | 51 | 23.7 | 2 | 109.1% | 60.9% |
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