Warren Buffett has built his investment approach around one core idea developed through decades of market success: purchasing outstanding companies at reasonable prices beats buying mediocre companies at bargain prices. His strategy focuses on finding businesses with strong competitive positioning—what he terms “economic moats”—that can maintain superior profitability over many years. Instead of following market trends or chasing speculative investments, Buffett targets companies with reliable management teams, steady earnings, and predictable cash generation that are reasonably valued.
The Validea Warren Buffett investment model converts these proven principles into a structured system for finding exceptional businesses. Drawing from Mary Buffett’s “Buffettology,” this quantitative method captures the essence of Buffett’s investment philosophy through specific financial standards designed to identify companies with lasting competitive strengths and consistent operational performance.
The model’s foundation rests on earnings stability, demanding that companies show continuous earnings growth across a full ten-year period without any years of losses. This strict standard mirrors Buffett’s preference for businesses with dependable profit generation that can perform well across different economic environments.
Quality assessment continues through rigorous profitability measures, requiring companies to achieve at least 15% average return on equity over ten years, with no individual year dropping below 10%. For non-financial businesses, the model also demands a ten-year average return on total capital above 12%, ensuring management uses all resources effectively.
The framework places significant emphasis on financial strength, requiring positive free cash flow to demonstrate operational effectiveness and capping long-term debt at five times annual earnings to maintain financial stability. Management capability is assessed through capital allocation performance, specifically requiring at least 12% returns on retained earnings—showing whether leadership can profitably reinvest company profits.
Valuation considerations only come into play after companies meet these thorough quality standards. Mirroring Buffett’s own approach, the model emphasizes patience in finding good entry opportunities, embodying his belief in acquiring quality enterprises at fair prices rather than chasing speculative plays 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 June 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 | $156.75 | $125,792 | 19.1 | 4.5 | 36 | 6.6 | 5 | 36.4% | 38.9% |
| ASML | ASML HOLDING NV (ADR) | 100 | $736.77 | $292,833 | 29.3 | 8.4 | 38 | 14.4 | 3 | 55.6% | 50.4% |
| FIX | COMFORT SYSTEMS USA INC | 100 | $478.23 | $16,869 | 28.7 | 2.3 | 85 | 9.5 | 15 | 37.8% | 101.2% |
| GWW | WW GRAINGER INC | 100 | $1,087.56 | $52,246 | 27.8 | 3.0 | 75 | 15.0 | 4 | 57.2% | 44.0% |
| KLAC | KLA CORP | 100 | $756.88 | $100,579 | 27.5 | 8.7 | 54 | 25.0 | 3 | 104.1% | 53.8% |
| LULU | LULULEMON ATHLETICA INC | 100 | $316.67 | $38,048 | 21.5 | 3.6 | 63 | 9.3 | 5 | 42.4% | 44.9% |
| LRCX | LAM RESEARCH CORP | 100 | $80.79 | $103,340 | 22.5 | 6.0 | 44 | 10.9 | 7 | 53.1% | 41.3% |
| NTES | NETEASE INC (ADR) | 100 | $121.76 | $77,098 | 17.4 | 5.2 | 82 | 3.9 | 2 | 23.9% | 21.3% |
| NVO | NOVO NORDISK A/S (ADR) | 100 | $71.50 | $233,682 | 20.0 | 5.1 | 25 | 11.1 | 1 | 88.1% | 100.8% |
| TSCO | TRACTOR SUPPLY CO | 100 | $48.40 | $25,662 | 24.1 | 1.7 | 45 | 11.5 | 8 | 49.6% | 19.8% |
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