SEEK Limited and CSL Limited: 2 high-performance stocks set to take off

SEEK Limited (ASX:SEK) and CSL Limited (ASX:CSL) have qualities of high earnings and strong returns that the "Oracle of Omaha" might even like.

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What does Warren Buffett look for in a stock to get him to consider buying it?

It's not just high earnings. Any company can have one or two good years, or generous market conditions may make business smooth sailing. No, one-off success doesn't tempt him.

Consistently high returns and growing earnings is what he is on the hunt for. It's hard to predict what a company will do in one or two years from now. However, if it shows a strong long-term past record of performance, it becomes easier to project its value into the future.

Below you'll find two companies which do have this kind of high performance history.

He doesn't set price targets. He sets return targets. If he can't see an investment making him an average 15% annually for 5 – 10 years, he moves on.

You don't have to be exactly like him, but you can learn a lot from his style.

First, there's SEEK Limited (ASX: SEK). In the past five years it has grown earnings an average 22% annually. It's using its good returns from investments to expand the business in Australia as well as Asia. The market leader in job searches, its seek.com.au website is the first stop for job hunters. SEEK's education service business is also growing, helping train and improve workers who want new or updated skills. It pays a 1.6% yield fully franked with more of its earnings going back into the company to drive growth.

Another one that readily comes to mind is the biopharmaceutical giant CSL Limited (ASX: CSL). This company has given investors a total shareholder return of 25.2% annually over the past ten years. That's phenomenal in itself, yet its earnings are still forecast to grow an average 15% annually in the next two years by analysts. It has what seems to be a low yield at 1.8% unfranked. That's because it puts more of its profits back into the business to generate high growth, so you can gain through a higher share price later on.

Always looking for growth and quality in earnings will lead you to other high performance stocks. I prefer SEEK because of its Asian business expansion potential.

We know of two more companies that have what Buffett might be looking for. Now you can discover the investing secrets of the $60 BILLION businessman — widely recognised as the world's greatest investor. Plus, you'll get two brand new ASX ideas! Your copy of The Motley Fool's brand-new report "The Wisdom of Warren Buffett — Plus 2 ASX Shares Buffett Could Love" is FREE when you click here.

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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