4 Buffett-Munger Stocks to Consider for May
- By James Li
According to the Buffett-Munger Screener, a Premium GuruFocus value screener, four stocks meeting Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio)'s four-criterion investing approach as of Monday include Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B), Allstate Corp. (NYSE:ALL), Group 1 Automotive Inc. (NYSE:GPI) and Sleep Number Corp. (NASDAQ:SNBR).
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Peter Lynch Chart of BRK.A
Buffett said that Berkshire seeks companies with the following four characteristics: understandable businesses, favorable growth prospects, shareholder-friendly management and attractive valuations. GuruFocus' Buffett-Munger Screener applies Buffett's investing criteria by selecting stocks with high business predictability rank, expanding profit margins, low debt-to-asset growth and low price-earnings-to-growth valuation.
Berkshire meets Buffett and Munger's criteria
Class B shares of Berkshire (NYSE:BRK.B) traded around $293.70, showing that the stock is fairly valued based on Monday's price-to-GF Value ratio of 0.93. The stock's PEG ratio of 0.52 outperforms over 79% of global competitors.
GuruFocus ranks Berkshire's profitability 7 out of 10 on several positive investing signs, which include a four-star business predictability rank, a high Piotroski F-score of 7 and net profit margins and returns outperforming over 90% of global competitors.
Gurus with holdings in Berkshire's Class B shares include Bill Gates (Trades, Portfolio)' foundation trust and Diamond Hill Capital (Trades, Portfolio).
Gurus with holdings in Berkshire's Class A shares include Chris Davis (Trades, Portfolio)' Davis Select Advisors and Tom Gayner (Trades, Portfolio)'s Markel Gayner Asset Management.
Allstate
Shares of Allstate (NYSE:ALL) traded around $134.89, showing that the stock is fairly valued based on Monday's price-to-GF Value ratio of 1.08. The stock's PEG ratio of 0.26 outperforms approximately 95% of global competitors.
GuruFocus ranks the Northbrook, Illinois-based property-casualty insurance company's profitability 7 out of 10, driven by a 4.5-star business predictability rank, returns that outperform over 60% of global competitors and three-year revenue and earnings growth rates topping more than 80% of global insurance companies.
Group 1 Automotive
Shares of Group 1 Automotive (NYSE:GPI) traded around $166.45 on Monday. Even though the stock is significantly overvalued based on a price-to-GF Value ratio of 2.04, Group 1 Automotive's PEG ratio of 0.59 outperforms over 85% of global competitors.
GuruFocus ranks the Houston-based vehicles and parts company's profitability 8 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank, a high Piotroski F-score of 8 and an operating margin that has increased approximately 4.4% per year on average over the past five years.
Sleep Number
Shares of Sleep Number (NASDAQ:SNBR) traded around $112.66, showing that the stock is significantly overvalued based on Monday's price-to-GF-Value ratio of 1.73. Despite this, the stock's PEG ratio of 0.66 outperforms approximately 84% of global competitors.
GuruFocus ranks the Minneapolis-based furniture company's profitability 9 out of 10 on several positive investing signs, which include a four-star business predictability rank, expanding operating margins and three-year revenue and earnings growth outperforming more than 90% of global competitors.
Disclosure: Long Group 1 Automotive.
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This article first appeared on GuruFocus.
