Validea’s Top Five Consumer Cyclical Stocks Based On Warren Buffett

Smart investing takes patience and time. You begin with the right
broker for international trading, then you base your trading plan on research and a solid strategy. One of the world’s most successful investors is Warren Buffet. He recommends seeking out companies that don’t rely too heavily on debt vehicles, and whose profitability is measurable and predictable in the long run. He considers their valuations too – their figures have to be reasonable enough to let your foot in.

You want to invest in a company that’s doing well, but must also be mindful of their stock price so that they fit your budget. If they’re too expensive, then no matter how lucrative they are, you can’t tag along because you can’t afford to. Validea has a rating system they’ve based on Warren Buffet’s legendary approach. Aside from debt and predictable earnings, other criteria include returns (initial, capital, equity, and expected), cash flow, resale value, and use of earnings. Companies that score 80% indicate good organisational strategy, while 90% or above is a solid buy. Let’s look at some companies that tick all the right boxes.

1. Hasbro

This 82% scorer bills itself as an expert in entertainment and play. It cuts across media, from TV shows to board games. Its versatility covers multiple interests and age groups, analogue and digital. This broad approach is part of its key to prosperity – having a profitable finger in so many varied pies increases its shots at success. That level of spread does make it harder to estimate returns, but its other measures are secure, at least according to Validea.

2. Nike

The footwear giant has refined their market share by diversifying. It produces shoe lines for multiple sports, from basketball to lacrosse, serving professional athletes and casual consumers. It’s also made its mark in the social consciousness space, endorsing superstars like Serena Williams and Colin Kaepernick. Their only downsides – according to Validea – is that their share repurchase levels are neutral, and their expected returns are unclear. Nike scores a decent 85% on the charts.

3. Steve Madden

The footwear experts score 72%, which isn’t ideal, but is still pretty respectable for offshore trading. They also deal in handbags and accessories. Their stable includes name brands (pun intended) like Betsey Johnson and Brian Atwood, as well as the aptly named Dolce Vita. Their expected earnings have proven difficult to validate, and they don’t make the best use of their earnings – at least from a business perspective – but they’re an otherwise good bet.

4. Michael Kors

It seems clothing makes a good investment – and here’s another fashion company that has made the list. Their Validea rating is 72%, and they’re involved in retail, wholesale, and licensing. Their licensing wing is mainly for lifestyle products like fragrances, jewellery, leather, cosmetics, and accessories (sunglasses, ties, watches and the like). The company’s weaknesses are in the areas of return on total capital and return on equity. Every other investment marker performs well above expectations.

5. Snap-on

This is more of an industrial company. It deals with tools, appliances, diagnostics, and repair. The company’s score is 72%, though it flops on its ‘return on total capital’ metric. Snap-on contributes to various industries including aerospace, government, transport, power, natural resources, and technical education, so it could stay relevant indefinitely.

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