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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (43033)	2/11/2006 2:56:31 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 67766

S&P Promising Growth Portfolio By David Braverman What Would Warren Do? S&P's Buffett screen uses the famous investor's principles to find stocks which may generate blazing returns Warren Buffett has made his reputation as the World's Greatest Investor by taking the longer view -- buying quality stocks with good earnings power and hanging on through bull and bear markets. During the last few decades, he has parlayed some well-chosen core holdings into an unparalleled performance record -- not to mention an enormous personal fortune. While the stock has lagged the overall market in the past few years, long-time Berkshire holders are still sitting on impressive gains. Berkshire's book value per share has grown at a compounded annual rate of more than 20% over the last 39 calendar years. If you had invested $10,000 in Berkshire in January, 1968, (the shares closed at $20.50 on the last trading day of that month), your holding would be worth more than $40 million today. BOOK VALUE. Author Robert Hagstrom tried to compile Buffett's key investing strategies in his 1994 best-seller, The Warren Buffett Way: Investment Strategies of the World's Greatest Investor. With Hagstrom's book as a source, we at S&P have put together a stock screen that picks companies using criteria similar to those that fit the legendary investor's growth-oriented style. S&P updates this screen on a semiannual basis, during February and again in August. Over the years, the screen has put in a pretty good performance itself. Since its inception on Feb. 13, 1995, through Jan. 31, 2006, the screen had an annualized return of 15.91%, vs. 9.32% for the S&P 500. However, in 2005, the screen stocks underperformed, falling 3.58% vs. the index's 3.00% gain (all results are price appreciation only). Here's how the screen portfolio has stacked up against the S&P since inception: Year Screen Perf. (% chg.) S&P 500 Perf. (% chg.) 1995 31.4 27.9 1996 41.1 20.3 1997 11.5 31.0 1998 18.1 26.7 1999 18.0 19.5 2000 23.8 -10.1 2001 0.6 -13.1 2002 -12.7 -23.4 2003 31.0 26.4 2004 22.4 9.0 2005 -3.6 3.0 From inception Feb. 13. Many of the stocks from the previous update of the portfolio in August, 2005, also appear in this edition. The screen continues to harbor quite a few health-care and financial shares, as companies in these sectors typically feature high margins and high return on equity -- key criteria for Buffett. Once again, a sprinkling of technology and energy concerns made the list as well. Here's our disclaimer: It should be noted that these aren't necessarily stocks that Buffett has bought or ever personally plans to buy. The list reflects only the criteria that Buffett has emphasized in the past. The full criteria for this screen: 1. Owner earnings ( cash flow less capital expenditures) above $50 million (changed in February, 2006, from $20 million) 2. Net margins of at least 15% for the trailing 12 months 3. Return on equity of at least 15% the previous quarter and in every year for the last three years 4. Retained earnings that have grown less than the market capitalization, on an absolute basis, in the last five years 5. Looking five years into the future, projected cash flow per share greater than the current market price for each stock (discounted to the present using the 30-year Treasury yield) 6. Market capitalization of $500 million or more. The current version of the screen lists 40 names: Company Ticker Adobe Systems ADBE Altria Group MO Apollo Group APOL C.R. Bard BCR Biomet BMET BlackRock BLK Brown & Brown BRO Cognizant Tech Solutions CTSH Cognos COGN Eaton Vance EV Equitable Resources EQT Factset Research Systems FDS FLIR Systems FLIR Forest Laboratories FRX Freeport McMoRan Copper & Gold FCX Garmin GRMN Graco GGG GTECH Holdings GTK Impac Mortgage Holdings IMH Infosys Technologies INFY Intl. Game Technology IGT Johnson & Johnson JNJ K-Swiss KSWS Knight Ridder KRI Kos Pharmaceuticals KOSP Legg Mason LM Lincare Holdings LNCR MEMC Electronic Materials WFR Mobile Telesystems MBT Novastar Financial NFI Nuveen Investments JNC Occidental Petroleum OXY Omnivision Technologies OVTI Per Se Technologies PSTI Petrobras Brasileiro PBR T. Rowe Price TROW Sigma Aldrich SIAL Techne TECH UST UST Votorantim Celulose VCP