The approach of Warren Buffett to invest is based on a core belief that has been developed by years of experience: buying excellent companies at reasonable prices beats the buying of mediocre companies against bargains. He is looking for companies with sustainable competitive fee – what he calls ‘economic canals’ – that can retain superior returns for many years. Instead of following the market trends or haunting speculative plays, Buffett focuses on well -managed companies that produce a steady income and reliable cash generation in rational ratings.
The Vallea Warren Buffett model turnover these proven principles in a structured system for finding high-quality companies. Based on the ‘Buffettology’ by Mary Buffett, this quantitative method transforms Buffett’s investment philosophy into specific financial measurements that identify companies with permanent competitive fee and consistent operational performance.
Stable income serves as the basis of this model, and demands that continuous profit will increase more than ten full years without losing. This strict standard reflects Buffett’s preference for companies that retain profitability through various economic cycles.
The assessment process includes rigorous profitability standards, for which an average return on equity of no less than 15% is required for a decade, where each individual year stays above 10%. For companies outside the financial sector, the model also requires the average return on total capital above 12% during this time frame, which confirms that management is used effectively.
Financial strength plays an important role, with requirements for a positive free cash flow to validate operational health and restrictions on long -term debts to a maximum of five times annual income to maintain balance stability. The model evaluates management competence by investigating how they reinvest the preserved profit, in particular that at least 12% return on these funds to prove an effective capital allocation.
Valuation factors only play a role after companies meet these thorough quality standards. After the approach of Buffett, the model emphasizes that the patient waits for favorable buying options, as a result of his conviction that the acquisition of quality companies at fair prices surpassed speculative investments or the next market fads surpassed.
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Here are the top ten highest score stocks according to the Buffett model of Validea for August 2025.
| Ticker | Company name | Patient Investor | Price | Market capital ($ mil) | PE Proportion | Price/ Sale | Family member Power | Price/ Book | Quality Percentile | Yield equity | Return Capital |
|---|---|---|---|---|---|---|---|---|---|---|---|
| ADP | Automatic Data Processing Inc | 100 | $ 300.44 | $ 121,768 | 30.1 | 5.9 | 71 | 19.7 | 1 | 76.0% | 68.6% |
| Terribly | Applied Materials Inc | 100 | $ 179.99 | $ 144,442 | 21.9 | 5.1 | 48 | 7.6 | 5 | 36.4% | 38.9% |
| ASML | ASML Holding NV (ADR) | 100 | $ 689.82 | $ 267,487 | 23.8 | 7.2 | 38 | 12.5 | 3 | 54.1% | 60.1% |
| GWW | WW Grainger Inc | 100 | $ 932.44 | $ 44,794 | 23.8 | 2.6 | 55 | 12.9 | 4 | 57.2% | 43.1% |
| Click | Kla Corp | 100 | $ 886.64 | $ 117,250 | 29.2 | 9.7 | 73 | 25.0 | 3 | 100.8% | 53.4% |
| LRCX | Lam Research Corp | 100 | $ 96.37 | $ 122,268 | 23.2 | 6.6 | 72 | 12.4 | 6 | 58.2% | 45.1% |
| To overtake | Unrean Inc (ADR) | 100 | $ 127.31 | $ 80,612 | 18.3 | 5.4 | 83 | 4.0 | 2 | 23.9% | 21.3% |
| NGO | Novo Nordisk a/s (ADR) | 100 | $ 48.19 | $ 160,102 | 13.2 | 3.4 | 17 | 7.3 | 1 | 88.1% | 100.5% |
| Neu | Newmarket Corp | 100 | $ 699.86 | $ 6,576 | 13.9 | 2.4 | 77 | 4.1 | 7 | 33.6% | 29.8% |
| TSCO | Tractor Supply Co | 100 | $ 57.63 | $ 30.556 | 28.4 | 2.0 | 70 | 12.3 | 8 | 45.3% | 20.1% |
Further research
Top Warren Buffett Stocks
Warren Buffett Portfolio
More about Warren Buffett
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