Investing Like Buffett

6 Growth-Oriented Stocks With Bullish Momentum That Could Offer Buffett-Like Returns

Want to hit a few home runs in the stock market?

Then get ready to hold your breath and get your hands dirty by digging through the investment dumpster for one reason:

Often the stocks that provide the best returns to investors over time, in my view, are also the same ones that are out of favor with the market participants in the current period.

That’s just my opinion though, so let’s look at one of Warren Buffett’s recent deals to show that this strategy has merit.

During the Financial Crisis, Buffett became an unofficial lender of last resorts to major financial institutions and other Fortune 100 companies that no one else would touch even if they wore a HAZMAT suit.

So why would he be willing to lend money and invest in them?

He believed that the fundamentals of these companies were strong enough to overcome the obstacles they faced and wanted to keep them moving forward, despite heavy financial losses. In addition, he surmised that if these companies merely survived the Financial Crisis they would likely generate returns that would justify the risk being taken.

How did he make out?

Like a bandit with $11B in profits!

Now can this strategy be replicated even in today’s market?

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6 Cheap Stocks That Outperformed The S&P 500 For 10 Years That Are Now Worth Reviewing

If you’re not an index investor then regardless of your strategy your goal is the same as everyone else: achieve alpha for your portfolio by stock picking in some form.

Now if you’re thinking “well I invest with mutual funds” here’s is a quick dose of cold-hard reality.

On average every mutual fund holds roughly 300 different stocks. Basic portfolio theory states that holding this many stocks all but guarantees you won’t outperform any stock market index over the long-term.

As well, it destroys the general advantages of diversification because you’re spread too thin.

Therefore, you’re all but guaranteeing that you’re paying a professional investor to simply underperform the market on your behalf.

So what should any investor who doesn’t index be doing right now?

Start doing due diligence on stocks that have a clear history of “winning” for their shareholders as Charlie Sheen once put it so bluntly.

To help you get started on this journey of independent due diligence I identified 6 undervalued stocks that have a few interesting, distinct common denominators among themselves.

What are these common denominators you ask?

First, while you can’t time the market you can time when you buy individual stocks. The stocks that I have identified are currently trading at a lower Forward P/E valuation than the S&P 500.

Why does this really matter?

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4 Undervalued, Turnaround Stocks Experiencing Unusual Trading Activity Right Before Earnings

With earnings season in full swing again it’s that time of the year when investors find out one thing: who’s been kicking you know what, who’s been treading water, or who’s slowly drowning in today’s economic environment. Even better, this is a great time, in my view, to get into turnaround stocks that could see their stock price move substantially higher after they release their latest earnings numbers.

Still, time is money and creating a short review list of high-quality turnaround stocks with the potential to explode higher on strong earnings can easily become extremely time-consuming. That’s why today I’ve found four interesting turnaround stocks that look ready to move much higher when they report their earnings this week for value hungry investors. This should help hungry value investors get an early start on their own independent due diligence before 2014.

Now what makes these stocks good turnaround candidates? First, their valuation is enticing from a price-multiple perspective. Specifically, all these companies are trading with a low (X<15) Forward Price/Earning Ratio. Now this matters, in my view, because this valuation metric holds extra value during earnings season.

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6 Cheap, Dividend Stocks With Explosive Sales Growth And Bullish Insider Buying Despite U.S. Budget Fears

With the U.S. budget crisis in full swing many are speculating that the U.S. economy’s road to recovery will likely be hindered due to Congress’s continued inability to pass a budget. In addition, with U.S. markets near all-time highs and baby boomers having developed itchy trigger fingers, due to the Financial Crisis, some are arguing this is just a powder keg waiting to go off with the first hint of economic slowing.

So is it time to cash out of the market right now?

In my opinion, the answer is no. In truth I’m taking a contrarian position to the fear mongering that we all see in the media right now for one simple reason: I’ve identified six middle- to large-cap dividend stocks that, in my view, should wet the appetite of value investors.

What makes them so appealing you ask?

First, from a value investing perspective these medium- to large-cap. dividend stocks are trading at a cheaper Forward P/E valuation than the S&P 500 Index.

What makes them really interesting though is that not only are they cheap from a price-multiple perspective but they’ve also posted strong double-digit Quarter-over-Quarter sales growth despite the tepid economic environment.

Still, why potentially buy them now when there is so much market uncertainty, right?

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