January 2022 Buffett Stocks

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Happy New Year everyone! Here’s your monthly update to the Buffett Score.

First off, I want to say a big thank you for joining the mailing list. I have a request though… if you are interested in more scores like this, please let me know by clicking the button below, or by emailing hello@buffettscore.com. I am going to be putting together new scores and I’m wondering exactly what this community is looking for. Those that reach out will be given access throughout the development process and will help shape the final product.

For those new, welcome! Each month the list of stocks that can be seen on the homepage are updated to include the companies that meet all criteria listed on the about page. This post contains all of the stocks that have either joined or left the mix.

New Buffett Score Stocks For January

Alright, onto the updates. As it was the holiday season, there wasn’t much shifting around (much less than in previous months). We’ll start with the good side of things, companies that are now a perfect 9 on the Buffett Score:

  • Lululemon Athletica (LULU)
  • NetApp (NTAP)

Lululemon’s bump came thanks to me caving and buying my wife a pair for Christmas. I jest, of course, but this company sells rather expensive workout clothes, and consumers continue to eat it up. It’s a lifestyle brand that continues to compound year after year - definitely one to watch.

NetApp facilitates data management and storage across all the major cloud providers. While I haven’t got much experience with this name, it’s in a fantastic and fast growing niche.

Given there’s only two companies here, I’ll be taking a look at both in January to see if there’s potential here for my own portfolio.

Stocks Removed From the List

How about those leaving the list? Well there’s a handful:

  • CorVel (CRVL)
  • Foot Locker (FL)
  • IES Holdings (IESC)
  • Paychex (PAYX)
  • VM Ware (VMW)

In the past I have had a few people ask “why” on these, so I will start providing that going forward.

Corvel left the list as the earnings yield is no longer higher than the 10yr treasury. The stock is up 7% over the last month and more than 50% over the last 6 months. That’s amazing if you’re holding, but it’s definitely stretched the earnings yield a little thin.

Foot Locker’s debt has grown past our threshold (3yr of net income). Probably not a good sign given the company’s shrinking footprint.

IES Holdings no longer generates “outsized cash returns.” For this we’re looking to see if the company generates $1 of FCF over a 5yr period for every $1 in assets. IES slipped ever so slightly and posted a $0.97.

Paychex has a bit of a shaky path with regards to shares outstanding. We check to see if a company has fewer shares outstanding today than it did 5yr ago and that is no longer the case for PAYX - albeit ever so slightly.

Finally, VM Ware. It’s now saddled with debt after Dell completed a spinoff of the company. This name, however, is interesting and I think I still want to take a look to see if the market is overlooking something. VM Ware is still a growing company in a growing space so there could be some potential here after recent significant drops.

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