Stock Criteria
Warren Buffett invests in stocks that have the following characteristics:
1. Wide Economic Moat - major competitive advantage
2. Easy to Understand Business - easy to understand how they make money
3. Return on Equity - measures how fast a company can grow earnings (15% minimum)
4. High Profit Margins - profit margins higher than industry peers
5. Consistent Operating Results - profit to sales ratio less than 2, price to cash flow under 12
6. Long Term Earnings Growth - favorable long term prospects for growth
7. Stong Management Team - honest management focused on creating value for shareholders
8. Low Debt - debt to equity less than .30
9. Margin of Safety - selling at a discount to true value
10. Consistent Operating Performance - minimum of 5 years consistent operating results
