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The week's question
In December 2024, in the thread "Re: BRK: Why Not XOM?", BreckHutHigh asked the members: "What about the long road trips with kids?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: tedthedog   😊 😞
Number: of 21939 
Subject: Re: Buffett's stock selection screen
Date: 11/08/23 11:47 AM
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Buffet's interest in growth was forward looking
"trading for 15 times forward earnings, and how many can expand earnings at 7% annually over the next five years with a reasonable degree of confidence."

Jim's screen included a criterion of EPS growth over last 5 years > 7%.

One can argue that earnings are unlikely to grow over the next 5 years if they haven't grown over the past 5 years, but that wasn't the Buffet prescription. If he wanted to look at growth over the past 5 years, he would have said so (maybe he did, it's not like we have a recorded conversation).

Just a thought:
If one posits that a past earnings growth criterion is useful in lieu of being able to project future earnings growth like Buffet can, then maybe one should also add a past return criterion? There's an implicit assumption in all this that solid earnings growth over a reasonably long period, e.g. 5 years, will more likely than not be associated with a solid return. So if one is going "ex-Buffet" and including a criterion that past earnings growth be very healthy, then maybe one should also add a criterion that the past return over the period be very healthy too, i.e. "Inflation + X%". Pick your "X".


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This community has written 21,448 posts about Berkshire Hathaway. The article-length ones it recommended most:
BRK: Why Not XOM? · 62 recs · 2024
Second quarter comments · 60 recs · 2023
Berkshire's Profit Contributors · 57 recs · 2023
Summary of 2Q 2026 · 54 recs · 2026
3Q Summary · 53 recs · 2024
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