Buffett, Bank of America, and Five Financials

Warren Buffett’s decision to exercise Berkshire Hathaway’s warrants to purchase 700 million shares of Bank of America common stock will make it the bank’s biggest shareholder, writes Validea CEO John Reese in a recent Forbes article.

Reese provides an overview of Berkshire’s history with Bank of America, explaining that this transaction will be the company’s most profitable in the financial sector. He also underscores the fact that financials have become a “cornerstone of Berkshire Hathaway’s holdings.”

Using the stock screening models he created based on the investment philosophy of Warren Buffett and other market gurus, Reese identified the following five high-scoring stocks:

  • Credit Acceptance (CACC) offers financing programs that enable automobile dealers to sell vehicles to consumers. The company earns high scores for its earnings predictability and long-term growth in earnings-per-share.
  • Bank of the Ozarks (OZRK) is a state-chartered bank that provides retail and commercial banking services. The company earns high marks for it stable and expanding earnings as well as its 10-year average EPS growth.
  • Citizen Financial Group (CFG) is a retail bank holding company that earns high marks for its P/E ratio as well as quarter-over-quarter sales growth.
  • Synovus Financial (SNV) is a financial services and bank holding company that scores well in light of earnings predictability as well as the stock’s price performance.
  • SunTrust Banks (STI) is a financial services provider that gets a thumb’s up for its ratio of price-earnings to growth in earnings-per-share. The company also boasts a favorable equity-assets ratio.