The Validea Warren Buffett investment approach, based on principles outlined in Mary Buffett’s “Buffettology,” represents a disciplined methodology focused on identifying exceptional businesses with sustainable competitive advantages. This strategy prioritizes companies demonstrating consistent operational excellence and financial stability over extended periods.
At its core, the model seeks businesses with uninterrupted earnings growth across a full decade, avoiding companies with any negative earnings years during this timeframe. Quality is further assessed through stringent return metrics, requiring companies to maintain a minimum 15% average return on equity over ten years, with no single year dipping below 10%.
Companies outside the financial sector must additionally demonstrate a ten-year average return on total capital exceeding 12%. The strategy values positive free cash flow as evidence of operational efficiency and financial health. Management effectiveness is scrutinized through their capital allocation decisions, with the model requiring at least a 12% return on retained earnings.
Financial resilience forms another critical component, with the model limiting long-term debt to no more than five times annual earnings. Once a company passes these comprehensive quality filters, valuation becomes the final consideration, with patience exercised to identify attractive entry points. This methodical approach embodies Buffett’s philosophy of focusing on established businesses with proven track records rather than chasing speculative opportunities or market trends.
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 April 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 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| AMAT | APPLIED MATERIALS INC | 100 | $145.06 | $117,853 | 19.0 | 4.3 | 37 | 6.3 | 5 | 35.2% | 37.8% |
| AX | AXOS FINANCIAL INC | 100 | $63.53 | $3,627 | 8.6 | 3.0 | 77 | 1.4 | 9 | 18.8% | 1,339.0% |
| FIX | COMFORT SYSTEMS USA INC | 100 | $324.11 | $11,523 | 22.2 | 1.6 | 64 | 6.8 | 16 | 35.0% | 91.2% |
| GWW | WW GRAINGER INC | 100 | $975.03 | $46,969 | 25.0 | 2.7 | 55 | 14.0 | 4 | 59.0% | 44.8% |
| ITW | ILLINOIS TOOL WORKS INC | 100 | $246.46 | $72,303 | 21.0 | 4.6 | 52 | 21.9 | 2 | 110.2% | 77.0% |
| KLAC | KLA CORP | 100 | $673.60 | $89,513 | 28.3 | 8.3 | 56 | 25.0 | 3 | 96.8% | 51.1% |
| KNSL | KINSALE CAPITAL GROUP INC | 100 | $482.14 | $11,223 | 27.1 | 7.3 | 52 | 7.6 | 9 | 32.3% | 10.6% |
| LRCX | LAM RESEARCH CORP | 100 | $72.61 | $93,207 | 22.1 | 5.8 | 40 | 10.6 | 7 | 50.4% | 37.5% |
| LULU | LULULEMON ATHLETICA INC | 100 | $293.06 | $35,354 | 19.9 | 3.3 | 40 | 8.6 | 5 | 42.4% | 44.9% |
| MSFT | MICROSOFT CORP | 100 | $378.80 | $2,815,993 | 30.5 | 10.8 | 51 | 9.3 | 1 | 34.3% | 42.7% |
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