Warren Buffett greatest success is investing in companies that have a moat which means investing in companies with strong brands, a history of high profit margins and dominant or semi-dominant in their industry. In similar terms they have a moat around them which helps keeps new competition out and margins for their goods and services high, although the prices can be very competitive. Charles Martin who works with Thompson Reuters writing in the Globe and Mail, May 20 offered some methods to figure out which companies have a good moat.

First criteria was the market cap had to be $ 5 billion or more.

Add earnings per share growth rates at least 5% compounded annually over the past 10 years.

Further add revenue growth of at least 10% compounded annually in the past 3 years.

Other criteria include lower debt-to-equity ratio than their peers; higher net profit margins and a history of share backbacks.

In addition, he used a Thompson Reuters product called StarMine to identify if the earnings were likely to continue.

20 Companies fit the bill from a wide variety of industry groups.

Company              Ticker                   Mkt Cap    EPS     Net Profit   Revenue/       Total Debt          52 Week Price   Dividend

Margin       Share              to Total Equity    Change %      Yield

VISA                       V-N                        167,980      41.5        42.7           12.4                     0                             29.5               0.6

Nova Nordick     NOVOB-CHP        114,058        21.1         29.8         13.8                    1.8                           55.5               1.4

Qualcomm            QCOM-Q              113,629          15.6        28.5        17.2                    0                              -13.2             2.2

CVS Health           CVS-N                  112,618          13.7          3.3         13.6                  34.1                             30.4             1.1

Nike                        NKE-N                  87,831           13.0        9.7          13.5                   12.7                             37                0.9

TJX                         TJX-N                    44,940        18             7.6         11.3                     38.1                           11.5              1.1

Hermes                  HRMS-PAR            39,430      15.5          20.9       13.2                       1.2                          30.5              2.4

Magna                     MG-T                     22,980         9.6             5.1      12.9                      11.9                           22.4             1.4

Monster Beverage  MNST-Q               22,112         38.4         19.6     14.8                      0                                 85.5            0

Ross Stores              ROST-Q                20,946        22.9          8.4     12.2                      17.5                             46.4            0.8

Chipotle Mexican G  CMG-N              19,724          50.3          10.8    21.7                     0                                 26                0

F5 Networks              FFIV-Q                9,080           23.3         18.0     16.4                   0                                  20.4            0

Hargreaves Lansdown  HRGL-L         9.071           42.1           45.2     20.8                  0                                 -0.4              1.8

Foot Locker                      FL-N              8,579             8.1             7.3      10.3                   5.4                             25.6             1.4

SEI Investments              SEIC-Q          7,732             8.8            25.2     13.4                  0.0                             44.0            1.0

Williams Sonoma             WSM-N        6,945             7.3             6.6      12.3                  0.2                               17.8            1.7

FactSet Research Sys       FDS-N            6,801           15.7            23.0    11.0                  0                                 52.9            0.9

Partner Re                          PRE-N            6,411            8.4            15.4      15.6                 11.6                              25.7            2.0

AXIS Capital                        AXS-N          5,528             9.3           17.6      11.5                 17.0                              21.1             2.0

Urban Outfitters                 URBN-Q      5,272             12.0            7.0     14.9                 0                                    7.6              0

Linking to Dividend paying stocks, if you look at the second last column over the past 52 weeks 17 of the 20 outperformed the market with gains from 20 to 50%. This means if you own them, your money besides being exposed to less risk outperformed the market which is a win-win. Investing in quality stocks never goes out of style particularly if the desire is to make more. The challenge is to narrow the field and pick the best of the breed.

There are more questions than answers, till the next time – to raising questions.