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If you’ve ever wondered what Warren Buffett might look for if he were screening stocks today, you’re in the right place.
This stock screen is built directly from the principles laid out in the bestselling book Buffettology. The goal is simple: identify companies with the financial strength, profitability, and resilience that could make them worthy of a place in a value-focused portfolio.
To qualify for this list, a company had to meet a demanding set of requirements:
- A ten-year track record of generally increasing earnings per share (EPS), with no negative earnings years.
- Long-term debt less than five times annual earnings, to ensure the business is not over-leveraged.
- An average return on equity (ROE) of at least 15% over the past decade, demonstrating consistently high profitability.
- An average return on invested capital (ROIC) of at least 12% over the last ten years, ensuring efficient use of capital.
- An earnings yield today that exceeds the current yield on long-term U.S. Treasury bonds, offering a compelling value proposition relative to the risk-free rate.
After applying these filters, just 54 companies made the cut as of April 2025. Each one stands as a potential example of the kind of financial strength and consistency that Buffett himself has championed over his legendary investing career.
Let’s get into the results and see which companies today carry the kind of qualities that could turn into tomorrow’s great investments.
Click “Get the data” link to download the table for your own use.
Please note that the earnings yield > long term treasury yield is the only filter for valuation in this screen. Every other filter screens for quality of earnings and balance sheet. Any of these stocks can be a great long term hold and will compound your investment over time. However, to get the best performance, you should check for valuation as well as conduct deeper business review to ensure that there are no threats on the horizon.
I find the following stocks interesting to pursue further research:
- LRCX: Lam Research is one of the largest semiconductor wafer fabrication equipment manufacturers in the world. The valuation is reasonable with a P/E ratio under 20, strong financials and a nice dividend yielding 1.3% and growing by 15% per year.
- MRK: A forward P/E of 8.5 makes Merck stock very attractively priced. The company continues to grow its Earnings and pays a great dividend (3.9% yield, 5%+ growth)
- TGT: Target has had recent troubles with shoppers boycotting its stores over its DEI policy reversal. The stock is cheap and reflects these issues. P/E is around 10 and P/S is a low 0.4. These issues are likely temporary and will blow over in a few years at most.
- RPM: RPM International Inc manufactures and sells a variety of paints, coatings, and adhesives. Specialty Chemicals has been in a cyclical trough recently and the valuation today looks a little rich, but the cyclicality needs to be looked into. There is a lot of profit to be made buying at cycle lows and exiting when the revenue and stock price appreciate.
None of this is a recommendation to buy any stock. We do own PEP from this list in our Dividend Fortress Portfolio.
