Potential Investment Targets Of Warren Buffett - Part III

Warren Buffett sits on big cash that is growing each month. I've started an article serial that discovers potential white elephants which could be potential takeover targets for the big guru investor.

The ideas came from Bloomberg. In my view, they are a little bit abstract and far away from that you might think because they were discovered by strict criteria.

Today you can find additional 5 stocks which could be interesting for the institutional investor from Omaha.

Here you can find the first two articles with the criteria:

5 Stocks That Warren Buffett Would Love: Part II
Warren Buffett's Targets Part I

5 stocks that Warren Buffett should like are..

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5 Stocks That Warren Buffett Would Love: Part II

Yesterday, I wrote about stocks that Warren Buffett would love. 

I introduced five picks that are often mentioned when analysts talk about potential takeover targets by the guru investor from Omaha.

Today I will continue this stock idea spinning by showing you additional companies that fulfill the following criteria:

- Market Capitalization from $15 Billion to $40 Billion

- Capital Expenditures / Net Fixed Assets under 10%

- 5-Year Average Growth in ROIC in Highest 50%

- P/E Ratio Below Average Company Value in Home Market

- Return on Common Equity over 10%

- Excludes Banks, Brokerages, Asset Managers, Technology, Biotechnology Companies

There are a few stocks available on the market that fulfill these restrictions. Some of those stocks are still in his latest portfolio but there are also many fresh ideas as you might have seen in the first part of this article serial.

Additional 5 stocks that Warren Buffett would love are...

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Warren Buffett's Targets Part I: Potential White Elephants Of The Guru Investor

Warren Buffett is one of the most trusted and popular investors on the market. He made from a dozen dollars over USD 58 billion. On this blog, I also cover the activities of the guru investor and publish his trades and thoughts.

There are several speculations on the market what Warren Buffett buys next. He has around USD 15 billion in cash, a number that is growing monthly. Some of Warren Buffett's criteria are:

- Market Capitalization from $15 Billion to $40 Billion

- Capital Expenditures / Net Fixed Assets > 10%

- 5-Year Average Growth in ROIC in Highest 50%

- P/E Ratio < Average Company Value in Home Market

- Return on Common Equity > 10%

- Excludes Banks, Brokerages, Asset Managers, Technology, Biotechnology Companies

By screening the market with the above mentioned criteria, there are popping out a few interesting stocks. Some are often discussed like General Mills or Hershey, W.W. Grainger or FedEx.

Big takeovers make sense for Warren Buffett, also when they are higher valuated. More important are the stable cash flows. The strategy is to buy stocks that have big brands and produce products. They buy commodities and create wonderful things for people all over the world.

5 picks that Warren Buffett would like to consider....

General Mills (NYSE:GIS) has a market capitalization of $30.78 billion. The company employs 41,000 people, generates revenue of $17.774 billion and has a net income of $1.793 billion. General Mills’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.443 billion. The EBITDA margin is 19.37 percent (the operating margin is 16.04 percent and the net profit margin 10.09 percent).

Financial Analysis: The total debt represents 35.17 percent of General Mills’s assets and the total debt in relation to the equity amounts to 119.44 percent. Due to the financial situation, a return on equity of 28.34 percent was realized by General Mills. Twelve trailing months earnings per share reached a value of $2.69. Last fiscal year, General Mills paid $0.99 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 18.31, the P/S ratio is 1.73 and the P/B ratio is finally 4.73. The dividend yield amounts to 3.08 percent and the beta ratio has a value of 0.20.

Long-Term Stock Price Chart Of General Mills (GIS)

Long-Term Dividend Payment History of General Mills (GIS)

Long-Term Dividend Yield History of General Mills (GIS)

Hershey (NYSE:HSY) has a market capitalization of $21.45 billion. The company employs 12,100 people, generates revenue of $6.644 billion and has a net income of $660.93 million. Hershey’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1.399 billion. The EBITDA margin is 21.07 percent (the operating margin is 16.72 percent and the net profit margin 9.95 percent).

Financial Analysis: The total debt represents 40.10 percent of Hershey’s assets and the total debt in relation to the equity amounts to 183.93 percent. Due to the financial situation, a return on equity of 69.79 percent was realized by Hershey. Twelve trailing months earnings per share reached a value of $3.45. Last fiscal year, Hershey paid $1.56 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 27.80, the P/S ratio is 3.21 and the P/B ratio is finally 20.71. The dividend yield amounts to 2.02 percent and the beta ratio has a value of 0.21.

Long-Term Stock Price Chart Of Hershey (HSY)

Long-Term Dividend Payment History of Hershey (HSY)

Long-Term Dividend Yield History of Hershey (HSY)

W.W. Grainger (NYSE:GWW) has a market capitalization of $17.65 billion. The company employs 21,100 people, generates revenue of $8.950 billion and has a net income of $698.85 million. W.W. Grainger’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1.357 billion. The EBITDA margin is 15.16 percent (the operating margin is 12.64 percent and the net profit margin 7.81 percent).

Financial Analysis: The total debt represents 11.26 percent of W.W. Grainger’s assets and the total debt in relation to the equity amounts to 18.67 percent. Due to the financial situation, a return on equity of 23.97 percent was realized by W.W. Grainger. Twelve trailing months earnings per share reached a value of $11.25. Last fiscal year, W.W. Grainger paid $3.06 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 22.61, the P/S ratio is 1.97 and the P/B ratio is finally 5.84. The dividend yield amounts to 1.46 percent and the beta ratio has a value of 0.92.

Long-Term Stock Price Chart Of W.W. Grainger (GWW)

Long-Term Dividend Payment History of W.W. Grainger (GWW)

Long-Term Dividend Yield History of W.W. Grainger (GWW)

CBS Corporation (NYSE:CBS) has a market capitalization of $37.00 billion. The company employs 20,930 people, generates revenue of $14.089 billion and has a net income of $1.669 billion. CBS Corporation’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.594 billion. The EBITDA margin is 25.51 percent (the operating margin is 20.95 percent and the net profit margin 11.85 percent).

Financial Analysis: The total debt represents 22.38 percent of CBS Corporation’s assets and the total debt in relation to the equity amounts to 57.98 percent. Due to the financial situation, a return on equity of 16.24 percent was realized by CBS Corporation. Twelve trailing months earnings per share reached a value of $2.94. Last fiscal year, CBS Corporation paid $0.44 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 20.96, the P/S ratio is 2.63 and the P/B ratio is finally 3.80. The dividend yield amounts to 0.78 percent and the beta ratio has a value of 2.27.

Long-Term Stock Price Chart Of CBS Corporation (CBS)

Long-Term Dividend Payment History of CBS Corporation (CBS)

Long-Term Dividend Yield History of CBS Corporation (CBS)

FedEx (NYSE:FDX) has a market capitalization of $44.34 billion. The company employs 112,000 people, generates revenue of $44.287 billion and has a net income of $1.561 billion. FedEx’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $5.538 billion. The EBITDA margin is 12.50 percent (the operating margin is 5.76 percent and the net profit margin 3.52 percent).

Financial Analysis: The total debt represents 8.91 percent of FedEx’s assets and the total debt in relation to the equity amounts to 17.19 percent. Due to the financial situation, a return on equity of 9.72 percent was realized by FedEx. Twelve trailing months earnings per share reached a value of $5.19. Last fiscal year, FedEx paid $0.56 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 27.37, the P/S ratio is 1.00 and the P/B ratio is finally 2.60. The dividend yield amounts to 0.42 percent and the beta ratio has a value of 1.50.

Long-Term Stock Price Chart Of FedEx (FDX)

Long-Term Dividend Payment History of FedEx (FDX)

Long-Term Dividend Yield History of FedEx (FDX)

If you would like to receive more thoughts about Warren Buffett, you should subscribe to my free e-mail list. Alternatively, you can follow me on Facebook or Twitter.

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*I am long GIS. I receive no compensation to write about these specific stocks, sector or theme. I don't plan to increase or decrease positions or obligations within the next 72 hours.

For the other stocks: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.

Yields Dividend Champions | Yields Dividend Contenders | Yields Dividend Kings | High-Yield Large Cap | +10% Yielding Stocks | Dividend Aristocrats |

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6 Best Risk Rewarded Dividend Stocks From The S&P 500

Investors should take care about the risk when they plan to invest. A good and well-known indicator for the risk assessment is the Shape ratio.

The ratio evaluates the performance of the stock in relation to its volatility. It's also a figure that is based on the past performance data. Future developments are not detected.

Below are 6 stocks from the S&P 500 with very attractive Sharpe ratios. My main criteria are a dividend yield of more than 1 percent at a payout ratio of less than 100 percent of earnings.

The top risk rewarded dividend stocks from the S&P 500 are....

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5 Attractively Valued Stocks With At Least One Dividend Hike

Cheap stocks are the basis for a good return. But the definition of cheapness is large. One ratio that measures the cheapness of a stock in relation to its growth is the Price-Earnings-To-Growth ratio (PEG ratio).

A PEG-value over one indicates that the stock could be overpaid. Today I would like to generate some fresh stock ideas by screening the market by attractively valuated dividend stocks that have raised dividends for at least one time.

These are my criteria in detail:

- Market cap is greater than USD 100 million

- Dividend yield is above 3%

- At least one dividend hike

- Total debt to equity is under 1

- 12Trailing P/E is less than 15

- Forward P/E is less than 15

- PEG ratio is less than 1

Only five stocks fulfilled these tighten criteria of which two are High-Yields. All results are currently recommended by brokerage firms.

The top 5 results are....

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Dividend Growth Alert: 38 Stocks With Higher Dividends

Within the recent week, 38 companies have raised their dividend distributions - A good number in my view. On the list are again higher capitalized stocks with a solid track record. I talk about General Electric or 3M.

You can find, like each week, a detailed overview about the biggest stocks below. In addition, there is a full list of all stocks and funds attached.

My favorite Lage Cap dividend grower with recent dividend hikes are...

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Xcel Energy (XEL): An Electric Utility Stock Added To The Passive Income Portfolio

I’ve only two trades to hit the $3,000 expected dividend income by the end of this year. On the last trading day of the week, I decided to buy a new stake from the utility sector. It was the electric utility stock Xcel Energy. I was impressed about the solid earnings and dividend growth in the past. For sure the debt ratios are not impressive but for a utility company almost solid.

I purchased 50 shares at $28.21 which resulted in $1,410.50 total investment cost. The stake should increase the current portfolio income by $55 bucks per year to a total estimated amount of $2,934.19. That’s very close to my minimum target of $3,000.

Earnings and Dividends of Xcel Energy

XEL has a low forward P/E of 14.17 and yields at 3.97 percent. That’s a good number in my view because earnings are expected to grow by 6.70 percent for the next five years.

Latest Portfolio Transactions (Click to enlarge)

Latest Portfolio I (Click to enlarge)

Latest Portfolio II (Click to enlarge)

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For readers who are new to the matter and my dividend growth philosophy: I funded a virtual portfolio with 100k on October 04, 2012 with the aim to build a passive income stream that doubles each five to ten years. I plan to purchase each week one stock holding until the money is fully invested. The total number of constituents is expected at 50 – 70 companies and the dividend income should be at least at $3,000 per year.

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Stockholdings of the Dividend Yield Passive Income Portfolio are up 9.99 on average. Due to the high cash amounts over the recent year, the total performance is only at 10.21 percent. The major indices increased by 20 to 35 percent.

Latest Portfolio Performance (Click to enlarge)

For sure, the portfolio did not beat the market, but was not really invested. The major goal is also not to make quick money. The aim is to create a stable dividend income that doubles each ten years or less.

With remaining cash of $14,677, it’s still possible to boost the current income by $500 bucks but I plan to hold a significant amount of cash in order to be liquid when the markets are losing ground. Only in falling markets raises the possibility to get cheap long-term bets.

Here is the income perspective of the portfolio

Sym	Name	P/E Ratio	Dividend Yield	Buy	# Shrs	Income	Value
TRI	Thomson Reuters C	33.69	3.48	28.90	50	$65.00	$1,884.50
LMT	Lockheed Martin C	15.26	3.34	92.72	20	$95.60	$2,884.20
INTC	Intel Corporation	13.6	3.58	21.27	50	$45.00	$1,252.75
MCD	McDonald's Corpor	17.17	3.28	87.33	25	$78.00	$2,412.75
WU	Western Union Com	11.18	2.96	11.95	100	$50.00	$1,701.00
PM	Philip Morris Int	16.23	4.08	89.76	30	$104.70	$2,565.60
JNJ	Johnson & Johnson	20.51	2.82	69.19	20	$51.80	$1,841.80
MO	Altria Group Inc	14.91	3.56	33.48	40	$54.40	$1,542.80
SYY	Sysco Corporation	21.84	3.09	31.65	40	$44.80	$1,458.00
DRI	Darden Restaurant	18.12	4.12	46.66	30	$63.00	$1,532.70
CA	CA Inc.	14.05	3.04	21.86	50	$50.00	$1,646.50
PG	Procter & Gamble	20.81	2.89	68.72	25	$59.20	$2,046.00
KRFT	Kraft Foods Group	17.18	3.81	44.41	40	$80.00	$2,160.00
MAT	Mattel Inc.	18.86	3.2	36.45	40	$57.60	$1,820.80
PEP	Pepsico Inc. Com	19.17	2.74	70.88	20	$44.82	$1,636.20
KMB	Kimberly-Clark Co	21.71	3.1	86.82	15	$48.60	$1,577.70
COP	ConocoPhillips Co	10.57	3.91	61.06	20	$52.80	$1,397.60
GIS	General Mills In	18.49	2.88	42.13	30	$42.60	$1,479.00
UL	Unilever PLC Comm	18.66	3.52	39.65	35	$48.83	$1,396.85
NSRGY	NESTLE SA REG SHR	19.77	3.04	68.69	30	$65.31	$2,171.40
GE	General Electric	20.54	2.89	23.39	65	$51.35	$1,778.40
ADP	Automatic Data Pr	27.02	2.25	61.65	25	$44.63	$1,999.25
K	Kellogg Company C	23.17	2.97	61.52	25	$45.00	$1,513.00
KO	Coca-Cola Company	20.66	2.81	38.83	40	$44.80	$1,601.60
RTN	Raytheon Company	15.24	2.43	57.04	20	$43.00	$1,767.80
RCI	Rogers Communicat	11.78	3.89	46.5	50	$84.60	$2,199.00
GPC	Genuine Parts Com	18.3	2.63	77.06	20	$42.96	$1,635.40
TSCDY	TESCO PLC SPONS A	N/A	4.31	17.08	110	$75.79	$1,805.10
APD	Air Products and	23.69	2.5	85.71	15	$41.55	$1,669.50
GSK	GlaxoSmithKline P	20.34	4.67	52.16	30	$72.24	$1,541.40
WMT	Wal-Mart Stores	14.85	2.43	79.25	20	$37.60	$1,548.60
BTI	British American	15.94	4.01	111.13	30	$125.40	$3,125.40
CHL	China Mobile Limi	10.16	4.32	55.32	40	$89.52	$2,065.20
MMM	3M Company Common	20.96	1.86	110.27	15	$38.10	$2,050.80
TUP	Tupperware Brands	19.84	2.61	80.98	15	$37.20	$1,429.35
IBM	International Bus	12.48	2.05	193.17	20	$74.00	$3,600.40
HAS	Hasbro Inc.	23.97	2.3	44.09	30	$36.00	$1,574.70
T	AT&T Inc.	25.22	5.22	34.47	30	$54.00	$1,029.00
WAG	Walgreen Co. Comm	22.24	2.07	44.25	30	$35.40	$1,771.20
AFL	AFLAC Incorporate	10.08	2.15	59.39	20	$28.40	$1,313.00
TGT	Target Corporatio	16.64	2.54	68.69	32	$50.56	$1,999.68
CSCO	Cisco Systems In	11.46	2.42	23.98	130	$66.30	$2,746.90
DE	Deere & Company C	9.84	2.23	84.11	15	$29.85	$1,351.20
RGR	Sturm Ruger & Co	13.64	2.95	51.65	20	$42.48	$1,457.80
LO	Lorillard Inc Co	15.64	4.42	42.3	30	$66.00	$1,497.00
UNP	Union Pacific Cor	18.1	1.8	154.75	8	$23.68	$1,308.80
IDA	IDACORP Inc. Com	15.86	2.97	47.94	20	$31.40	$1,054.20
BAX	Baxter Internatio	16.98	2.86	66.38	20	$38.40	$1,367.80
MSFT	Microsoft Corpora	13.57	2.68	33.88	40	$38.80	$1,472.00
ACN	Accenture plc. Cl	16.13	2.19	77.71	20	$34.80	$1,611.00
BCE	BCE Inc. Common	14.02	3.98	44.26	25	$42.48	$1,066.50
VZ	Verizon Communica	63.06	4.28	50.31	30	$62.25	$1,442.40
CVX	Chevron Corporati	10.08	3.17	124.03	10	$39.00	$1,227.80
ORCL	Oracle Corporatio	15.73	0.66	35.2	40	$9.60	$1,454.80
XEL	Xcel Energy Inc.	14.87	3.91	28.21	50	$55.00	$1,410.50
						$2,934.19	$95,894.63
						Average Yield	3.06%
						Yield On Cost	3.37%

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