Would Warren Buffett Buy These 14 Stocks?

Pankaj Patel, managing director of Credit Suisse (NYSE:CS) and global head of quantitative research, has compiled a list of stocks based on the following Warren Buffett inspired criteria.

Return on equity greater than 15%

Debt to equity ratio less than 50%

Steady or improving net and gross margins over the past two or three years

Proprietary valuation model that predicts at least a 10% upside

No SEC inquiries or accounting issues

Not involved in a merger or acquisition  

Credit Suisse also performed historical testing using this criteria.  Since 2002, the Buffett inspired portfolio has outperformed the S&P 500 (NYSEARCA:SPY) every year except one, 2008.  The outperformance has ranged from 2% to 21%.

The screen returned the following 14 stocks, which Mr. Patel believes will do well in 2012, even in a poor economy.  Two of the stocks are already owned by Berkshire Hathaway (NYSE:BRKA):

Polaris Industries, Inc. (NYSE:PII)  The company engineers and manufactures snowmobiles, all-terrain vehicles, motorcycles, and utility vehicles.  Shares up 46% year-to-date.

iRobot Corporation (NASDAQ:IRBT)  iRobot designs and builds robots that make a difference in people’s lives.  It’s cleaning robots provide faster, smarter ways to get dirty jobs done.  Shares are up 14% year-to-date.

Herbalife Ltd. (NYSE:HLF)  This stock pick is a global nutrition and weight management company that sells products over the world through 2.3 million independent distributors.  Shares are up more than 50% year-to-date.

Darling International Inc. (NYSE:DAR)  Although shares are flat, Darling International is the only publicly-traded rendering company, leading the country in providing fat and bone rendering, providing recycling and recovery solutions to the nation’s food industry.

Exxon Mobil (NYSE:XOM)  This oil giant is the world’s largest publicly international oil and gas company.  As of the end of September, Buffett held 421,800 shares.  Shares have gained nearly 3% this year.

Chevron (NYSE:CVX)  Shares of this oil play have gained about 4% this year.  Chevron has major operations in the world’s most important oil and gas regions.

Franklin Resources (NYSE:BEN)  A global investment management organization known as Franklin Templeton Investments.  The firm has an extensive global presence, including offices in over 30 countries.  Shares have declined nearly 17% year-to-date.

T. Rowe Price (NASDAQ:TROW) Another global investment management firm dedicated helping clients achieve long-term success.  Shares are down almost 23% this year.

MWI Veterinary Supply, Inc. (NASDAQ:MWIV)  Supply company for veterinarians in the United States, including products, management tips, and company information. Shares are flat for the year.

Hi Tech Pharmacal Co. Inc. (NASDAQ:HITK)  A specialty pharmaceutical company that develops , manufactures, and markets generic and branded prescription and OTC products.  Shares are up 54% year-to-date.

General Dynamics Corp. (NYSE:GD)  Defense industry contractor for shipbuilding and marine systems, defense systems, land and amphibious combat systems and munitions.  As of the end of September, Buffett actually reported a new 3.1 million share position in the company.  Shares are down 14% this year.

Illinois Tool Works Inc. (NYSE:ITW)  A diversified manufacturer of engineered products and specialty systems.  The global industrial company leads commercial innovation.  Shares have fallen 20% year-to-date.

NetApp, Inc. (NASDAQ:NTAP)  Provides an integrated solution that enables storage, delivery, and management of network data and content to achieve business goals for clients.  Shares have declined nearly 40% this year.

Altera Corp. (NASDAQ:ALTR)  A Silicon Valley manufacturer of programmable logic devices.  The company was founded in 1983 and is headquartered in San Jose, California.  Shares have edged 2% lower for the year.

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