Buffett-InspiredStocks to Beat

the Summertime Blues

BY JOHN REESE

Summertime has never enjoyed a good reputation on Wall Street. It’s usually a time when

thin trading volumes can exaggerate price moves in both directions, up and down. Witness

the old adage, “Sell in May and go away,” an expression that has its roots firmly planted in

reason. From 1950-2010 the Dow Jones Industrial Average returned 7.4% on average from

November 1 through April 30, compared to a 0.4% average for being invested in only the May 1 to

October 31 period.

However, most savvy investors have long-term investment plans and stocks, as measured by the

S&P 500, gained 11.1% annually from 1950 to 2015. But to get yearly returns like these investors

have to stay invested. So what should investors do to combat the summer blues?

We asked John Reese, founder and CEO of Validea, editor of Validea Hot Line and author of The

Guru Investor: How to Beat the Market Using History’s Best Investment Strategies, to look for

stocks with strong interest from one of his portfolios that are based on the investment strategies of

legendary investors.

Warren Buffett is considered by many to be the greatest investor of all time. As the chairman of

Berkshire Hathaway, Buffett has consistently outperformed the S&P 500 for decades, and in the process

has become one of the world’s richest men. Validea’s Patient Investor portfolio is based on the

investment approach of this sage and since 2003 it has returned 142%, outperforming the market by 43%.

Reese’s interpretation of Buffett’s approach is based on the book Buffettology, written by

Buffett’s ex-daughter-in-law Mary Buffett. Buffett doesn’t try to capitalize on small day-to-day

stock market movements; instead, he focuses on a company’s business, because he knows that,

over time, the stocks of firms with strong businesses and good long-term prospects are likely to rise

considerably, regardless of what those stocks are doing today or next week. To find those strong

businesses, this strategy goes back as far as a decade into a company’s history, so only stocks with

consistent long-term track records can pass this methodology.

In this special report you’ll find seven stocks the Patient Investor model currently favors,

including Apple, of which Berkshire Hathaway recently purchased shares to the tune of $1 billion.

Based on their fundamentals, the others may also be worthy of the Oracle of Omaha’s consideration.

WWW.FORBES .COM/NEWSLETTERS 2

Polaris Industries (PII)

Business: Designs, engineers and manufactures off-road vehicles, including ATVs and

side-by-side vehicles, snowmobiles and motorcycles.

Market cap: $5.5 billion Long-term EPS growth rate: 20.5%

Return on equity (ttm): 46.1% Cash flow per share: $0.76

WWW.FORBES .COM/NEWSLETTERS 3

Apple (AAPL)

Business: Designs, manufactures and markets mobile communication and media

devices, personal computers and portable digital music players.

Market cap: $542.4 billion Long-term EPS growth rate: 23.5%

Return on equity (ttm): 39.1% Cash flow per share: $10.05

WWW.FORBES .COM/NEWSLETTERS 4

Banco Macro S.A. (BMA)

Business: Commercial bank group based in Argentina that offers traditional banking

services and products.

Market cap: $4.1 billion Long-term EPS growth rate: 45.6%

Return on equity (ttm): 35.0% Cash flow per share: $5.14

WWW.FORBES .COM/NEWSLETTERS 5

Ross Stores (ROST)

Business: Operates off-price apparel and home accessories stores under the Ross

Dress for Less and DDS Discount trademarks.

Market cap: $21.4 billion Long-term EPS growth rate: 14.7%

Return on equity (ttm): 43.0% Cash flow per share: $1.89

WWW.FORBESNEWSLETTERS .COM 6

Credit Acceptance (CACC)

Business: Provides financing programs to automobile dealers that enable them to sell

vehicles to consumers.

Market cap: $3.7 billion Long-term EPS growth rate: 19.3%

Return on equity (ttm): 34.2% Cash flow per share: $19.08

WWW.FORBESNEWSLETTERS .COM 7

TJX Companies (TJX)

Business: Operates off-price apparel and home fashions stores through HomeGoods,

TJX Canada, TJX International and Marmaxx segments.

Market cap: $50.4 billion Long-term EPS growth rate: 13.0%

Return on equity (ttm): 52.4% Cash flow per share: $2.12

WWW.FORBESNEWSLETTERS .COM 8

Monster Beverage (MNST)

Business: Its subsidiaries develop, market, sell and distribute energy drinks and

concentrates.

Market cap: $31.2 billion Long-term EPS growth rate: 17.2%

Return on equity (ttm): 21.9% Cash flow per share: $0.90

Long-term EPS growth rate is the average of 3- 4- and 5-year rates.

WWW.FORBESNEWSLETTERS .COM 9

Invest like Buffett, Lynch and Graham. John Reese’s

market-beating investing system and model portfolio is

based on the fundamental stock-picking strategies of

legendary investors. His Validea Hot List has returned

188% since 2003 versus 110% for the S&P 500. Click here

to learn from all-time great investors.