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Buffett bucket: 10 stocks based on Berkshire Hathaway chairman's investment philosophy

Experts now feel that it is better to stay put in the market and remain stock-specific than focusing on the index

April 23, 2019 / 10:10 AM IST
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Nifty and Sensex, after topping at 11,856.15 and 39,487, respectively, seem to have lost the momentum. The benchmark indices have fallen for the second consecutive session on April 22.

The S&P BSE Sensex lost about 500 points and Nifty closed below 11,600 dragged by losses in Reliance Industries, rise in crude oil prices and fall in rupee.

Experts now feel that it is better to stay put in the market and remain stock-specific than focusing on the index.

“The recent rally was led by strong FII flows and investors expecting NDA to form the next government again. The market has ignored the deteriorating macros and likely lower earnings growth from non-banking stocks in Nifty,” Rusmik Oza – Head of Fundamental Research, Kotak Securities Ltd told Moneycontrol.

“With crude decisively trading above the 200-DMA placed at ~$70/bbl, there is a risk of it going above $80/bbl. Crude above $70/bbl will hurt Indian macros and lead to INR depreciation against the USD,” he said.


Oza further added that at the recent peak the Nifty was trading at 18.5x Fw PE, which leaves very little room for any further re-rating. Keeping in mind the poor macros, a slowdown in many sectors and rich valuations it is ideal to wait for a further correction to enter the market.

Nifty has rallied about 7 percent so far in 2019 and about 10 percent in the last one year. Since we are trading near highs, experts feel that any meaningful dip would be a buying opportunity.

One sure shot way of generating or making wealth is by choosing the right stocks, and perhaps the best stock picker of all time is Berkshire Hathaway chairman Warren Buffett.

Warren Buffett is one of the most successful investors of all time. A former student of Benjamin Graham, Buffett is noted as a legendary value investor, though he is also believed to incorporate an emphasis on management quality and company growth prospects.

Buffett most likely would emphasise on those stocks that are trading at reasonable prices. Making the job simpler for investors in picking stocks conforming to values of Buffett, we have taken data from MarketSmith powered by William O'Neil.

The following stocks were filtered with the highest Master Score and RS rating. Master score is a proprietary filter created by MarketSmith that highlights great earnings potential and strong price performance of a stock.

The MarketSmith Master Score formula incorporates earnings growth, relative price strength, price-volume characteristics, industry group relative strength and other factors—everything Buffet swears by.

On the other hand, RS rating is a technical tool that is the most popular way to see the market’s top performers. The Relative Strength Rating is the result of calculating a stock’s percentage price change over the last 12 months.

A 40 percent weight is assigned to the latest three-month period; the remaining three quarters each receive 20 percent weight. All stocks are arranged in order of greatest price percentage change and assigned a percentile rank from 99 (highest) to 1 (lowest).

Here are 10 stocks according to above-mentioned parameters that one should look at (they are not any particular order):

Paushak: Master Score: 74| RS Rating: 85


Honeywell Automation: Market Score: 70| RS Rating: 88


HDFC: Master Score: 69| RS Rating: 76


KNR Construction: Master Score: 69| RS Rating: 81


Astral Poly: Master Score: 68| RS Rating: 89


Shree Cements: Master Score: 68| RS Rating: 90


TTK Prestige: Master Score: 66| RS Rating: 91


Berger Paints: Master Score: 63| RS Rating: 80


Shreyans Industries: Master Score: 62| RS Rating: 71


Grindwell: Master Score: 62| RS Rating: 85


Disclaimer: These stocks are for reference only and not buy ideas from MarketSmith.

The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Kshitij Anand is the Editor Markets at Moneycontrol.
first published: Apr 23, 2019 10:10 am

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