Warren Buffett Investments: How to Invest in Stocks

What does the Buffett Tool Provide?

YP Investors developed the Warren Buffett Fundamentals Tool to help you find companies with a durable competitive advantage. This is the key to Warren Buffett's success. If a company has a durable competitive advantage it will have immense earning power. As earnings continue to grow, the stock price will naturally follow and increase. This is exactly how Warren Buffett has become a Billionaire.

Warren has specific ratios and indicators he looks for in the Financial Statements that tell him if the company has a durable competitive advantage. We added these ratios to our tool and highlighted the key Financials that Warren looks at. Most importantly we take the last 10 years of Key Financial data and plot this in our Buffett Table. If the key data points meet the Warren Buffett requirements we add a mark to the table for each year. This in turn generates the Buffett Company Score that we display. The score is from 0-100, 100 being a perfect score where all of the last 10 years of key financial data has met Warren Buffett's requirements.

What is the Buffett Equity Bond?

In addition to the Buffett Company score our Tool also displays the Buffett Equity Bond Yield and the Buffett Price Target. Warren has witnessed the strength and predictability of the earnings growth of companies with a durable competitive advantage. This consistently strong growth turns these companies shares into somewhat of an Equity Bond, but this bond has an ever-increasing yield (interest payment)! The Bond is the company’s Shares/Equity. The interest payment is the company’s pre-tax earnings. The key to these are that the interest payment which is pre-tax earnings is ever increasing, unlike normal bonds which typically have fixed payments.

Furthermore, if we use the current Long-Term Corporate Bond Yield we can see how the current stock price compares and if it is a good time to buy in using the Equity Bond Yield. We can also get a good estimate or Price Target of where a company’s stock price should be using the Corporate Bond Yield. When we use the current Current Stock Price divided by the Corporate Bond Yield we get a price target of where the stock price could hit. The stock market will continue to undervalue or overvalue company’s stock prices but they should converge close to this Buffet Bond Capitalized Price Target.