How much would you pay to have time to speak with billionaire investor Warren Buffett? In 2014, a Singaporean man paid US$2.2 million for a lunch date with the "Oracle of Omaha". That's not the record, though. That went to an undisclosed bidder stumping up US$3.46 million in 2012. 2013 was an absolute bargain at US$1 million!
The winners get to talk with him for several hours apart from the meal. One man even parlayed the opportunity into an investment manager job at Buffett's Berkshire Hathaway, Inc. (NYSE: BRK.A) (NYSE: BRK.B).
Fortunately for the rest of us, Buffett has been handing out investment advice for free over the decades, mostly through his annual letter to Berkshire Hathaway shareholders.
In 1996, he told everyone a simple "formula" of what to look for in a stock:
"purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now."
Using that as a guide, I have two stocks that may have some similar traits.
— Amcor Limited (ASX: AMC), the leading packaging manufacturer has grown its revenues and earnings steadily over the past five years. It has given investors a total shareholder return of 22% annually over the same period. It has a stable, long-term growth profile and has made a number of recent acquisitions, including two overseas. It operates in over 43 countries, predominantly in the US. It has a 3.8% dividend yield unfranked and has a good history of raising dividends.
— Flight Centre Travel Group Ltd (ASX: FLT) has a strong brand in travel and holiday reservations and is a relatively easy business to understand. In addition to being the market leader in Australia, it has been very active in growing its network within big travel markets like the US and Europe. Its corporate travel business FCm Travel Solutions has also grown well. Net profit has grown steadily since 2010. Analysts are forecasting solid growth in both earnings and dividends over the next two years.
Looking out over five or ten years from now, both companies have businesses which could continue growing steadily, though there could always be a weak year here and there.
Growth of the scale of business is another thing to consider. A smaller company with growing earnings and revenue has more space to expand into. For example, there is one stock, a small-cap company not widely followed, that recently reported impressive results.
The Motley Fool's analysts have called it "The Top Stock of 2014". It has a reliable record for growth plus boasts a pathway for further earnings growth.
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