What makes Warren Buffett great is that he can quickly review a stock and decide if it is worthy of his attention as a business. No bets, punts or “we’ll give it a try” attitudes when stock picking for him.
He focuses on what that company may be earning in ten years and then works out if the potential return meets his standard. If not, he lets the “opportunity” pass him by.
He has decades of experience to guide him, but you can find those stocks that he may be interested in. Strong brand names, fat profit margins, stable returns and special competitive advantages. Just by those four alone, the list of stock candidates would be whittled down greatly.
Here are three stocks that could catch his attention and could help you earn money for a very satisfying retirement.
1) Domino’s Pizza Enterprises Ltd (ASX: DMP)
You might think that Domino’s Pizza is “everywhere already” and it’s just a pizza takeaway shop. However, the company has a long growth path in Australia and Japan, as well as in Europe like France where it has established a presence but is nowhere close to saturating its markets. As franchise businesses, they have very pleasing investment returns for owners. Big growth PLUS ample margins equals greater earnings over the coming years. This is a growth stock you want to have building up your long-term portfolio returns.
2) Coca-Cola Amatil Ltd (ASX: CCL)
Buffett has picked up many of his best investments when a stock was down for one short-term reason or another. American Express, Wells Fargo, Bank of America and so on- all top-shelf names that at one time slipped and he was there to help. Or help himself to a big swath of cheap shares in quality companies, that is!
Coca-Cola Amatil is no different. The soft drink and alcoholic beverage distributor has forecast an earnings downgrade, which sent traders for the exits. Foolish investors should be waltzing in as the company restructures and cuts costs. Having a position now while it irons things out would be a good move as this blue-chip stock offers a whopping 5.4% dividend yield.
3) Stockland Corporation Ltd (ASX: SGP)
Buffett took advantage of the real estate weakness in the US by buying into property and building companies. The housing market here is improving but is not at its peak. Low interest rates are driving buyers to purchase a home or another investment property. Housing construction is up and a big name company like Stockland is already benefiting from residential dwelling growth. It offers a huge 6.0% yield unfranked. It also develops commercial property which should grow afterwards when the economy is booming again. This is a high yield stock that could offer good growth as well.
Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned.
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