Warren Buffett has long been known for his affinity for recognizable brands and American icons like Coca Cola (KO). His methodology includes finding companies that are household names, have proven track records, and plenty of repeat business. So it shouldn't come as much of a surprise to see his firm, Berkshire Hathaway Inc. (BRK.A), in the headlines with 3G Capital Management LLC announcing a proposal to buy Heinz for a cool $23 billion.
Given Buffett's preferences, should we have seen this coming? With this hindsight in mind we looked for stocks we think Buffett would consider going forward. We used the Kapitall Super Screener to sort through stocks in the S&P 500 with strong historical performance and consumer-friendly names. Strong performance doesn't necessarily mean "high growth" or even "high yield." Companies in the list below have steadily increased sales over that last 5 years and have slowly paid out dividends to loyal shareholders. Consequently, the stocks below aren't exactly penny stocks; you get what you pay for. And that's a steady stream of future cash. These companies are here to stay and generate returns for years to come.
The potential for these mature companies is reflected in the large number of positive analyst ratings. Strong buy ratings on these stocks are an extra reassurance that these stocks can meet their sales growth targets.
Use this list as a starting point to determine not if but when to invest in these solid stocks.
1. Capital One Financial Corp. (COF, Earnings, Analysts, Financials): Operates as the bank holding company for the Capital One Bank (USA), National Association and Capital One, National Association, which provide various financial products and services in the United States, Canada, and the United Kingdom. Market cap at $31.46B, most recent closing price at $54.03. COF has a P/E ratio of 8.19 and a dividend yield of 0.37%. Sales have grown 11.35% over the last 5 years.
Capital One has built the bulk of its business around extending to credit to consumers in the form of credit cars and auto loans. From a financial standpoint, this is a stable and highly liquid business. Capital One's clever marketing has aligned with its strategy, making it one of the most recognizable brands around.
2. CVS Caremark Corporation (CVS, Earnings, Analysts, Financials): Operates as a pharmacy services company in the United States. Market cap at $62.93B, most recent closing price at $51.12. CVS has a P/E ratio of 16.82 and a dividend yield of 1.76%. Sales have grown 10.11% over the last 5 years.
CVS has always made repeat purchases a priority with their Extra Care cards. Walgreens has rolled out a similar loyalty program recently but CVS has been ahead of the curve.
3. Chevron Corporation (CVX, Earnings, Analysts, Financials): Engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. Market cap at $225.B, most recent closing price at $114.96. CVX has a P/E ratio of 8.63 and a dividend yield of 3.13%. Sales have grown 1.83% over the last 5 years.
Demand for energy won't be going away anytime soon. Chevron has been a leader in oil exploration around the world. In the US, it's second only to Exxon. New areas of production will support the business in the next few years. Chevron has been able to stabilize its business by avoiding risky growth (like expanding to areas in the Middle East).
4. Starbucks Corporation (SBUX, Earnings, Analysts, Financials): Operates approximately 16,858 stores, including 8,833 company-operated stores and 8,025 licensed stores. Market cap at $40.72B, most recent closing price at $54.34. SBUX has a P/E ratio of 29.22 and a dividend yield of 1.55%. Sales have grown 7.16% over the last 5 years.
It's no exaggeration when people say there is a Starbucks on every block, especially if you are in a high-density urban center. SBUX is now leveraging its extensive reach and iconic brand to target consumers at every end of the spectrum. There's truly something for everyone from those who want to brew at home to those looking for a bite to eat at one of Starbucks' stores. That's a veritable stream of revenue.
5. Whole Foods Market, Inc. (WFM, Earnings, Analysts, Financials): Engages in the ownership and operation of natural and organic food supermarkets. Market cap at $16.34B, most recent closing price at $88.12. WFM has a P/E ratio of 33.25 and a dividend yield of 0.91%. Sales have grown 12.16% over the last 5 years.
Whole Foods is no longer a niche organic food market but a regular weekend pit stop. Steady growth ahead will rely on stabilizing margins. As growth slows, also look for better dividends.
6. Wynn Resorts Ltd. (WYNN, Earnings, Analysts, Financials): Engages in the development, ownership, and operation of destination casino resorts. Market cap at $12.4B, most recent closing price at $122.96. WYNN has a P/E ratio of 25.56 and a dividend yield of 3.25%. Sales have grown 13.91% over the last 5 years.
If you're looking to gamble with a gaming stock, Wynn is the most recognizable brand around. Steve Wynn's leadership is a story of success. The entrepreneur has paved the way for this worldwide chain of resorts. Established resorts are expected to grow with the economy. Wynn has focused on customer service and attracting repeat business. Foursquare has also been a boon for businesses with iconic locations. Have you "checked-in" at the Wynn recently?
Written by Freda Ding
Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
- Access a performance overview for all stocks in the list
- Compare analyst ratings for the companies mentioned
- Compare analyst ratings to annual returns for stocks mentioned
- Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)
Dig Deeper: Access Company Snapshots, Charts, Filings
- Capital One Financial Corp. (COF, Chart, Download SEC Filings)
- CVS Caremark Corporation (CVS, Chart, Download SEC Filings)
- Chevron Corporation (CVX, Chart, Download SEC Filings)
- Starbucks Corporation (SBUX, Chart, Download SEC Filings)
- Whole Foods Market, Inc. (WFM, Chart, Download SEC Filings)
- Wynn Resorts Ltd. (WYNN, Chart, Download SEC Filings)
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