Buffett Says Stocks are Relatively Cheap

Notwithstanding all of the buzz surrounding the “pricey” stock market, legendary investment guru Warren Buffett thinks it’s a still the best place to plant your money. This according to a recent Forbes article by Validea CEO John Reese.

According to the article, Buffett believes “we’re not in a bubble territory or anything of the sort,” but Reese presents some opposing views including those of Nobel Laureate Robert Shiller.

Describing Joel Greenblatt’s use of earnings yield and return-on-capital as evaluative tools, Reese identifies the following five stock picks that score highly based on his guru criteria:

  • CVS Health (CVS) is an integrated pharmacy and health care company with favorable cash flow-per-share and number of shares outstanding that is well over the market average.
  • McKesson (MCK) in engaged in delivering pharmaceuticals, medical supplies and health care information technology and has solid earnings-per-share growth.
  • Akorn (AKRX) develops, manufactures and markets generic and branded prescription pharmaceuticals with an attractive ratio of price-earnings to earnings-per-share growth (PEG ratio, a hallmark of our Peter Lynch-based stock screen).
  • Tegna (TGNA) has a portfolio of media and digital businesses and boasts a favorable PEG ratio.
  • Meredith (MDP) is a diversified media company focused primarily on the home and family marketplace. The company earns high marks for its price-earnings ratio and quarterly earnings growth.