Companies Ranked by Business Predictability

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What is Predictability Rank?


GuruFocus recently conducted a back test study of Warren Buffett's strategy "buy good companies at fair prices" for the years 1998-2008. We focused on the companies that Warren Buffett likes, which are the companies that have predictable and proven earnings. For details, go to: GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank.

From this study we have developed the concept of Predictability Rank of businesses. We have found strong correlations between the Predictability of Businesses and the long term return of stocks, as shown in this table.

Predictability Rank

5-Star

4.5-Star

4 -Star

3.5-Star

3 -Star

2.5-Star

2 -Star

1-Star (non-predictable)

Average among all

Average Annualized Gain (Jan. 1998- Aug. 2008)

12.1%

10.6%

9.8%

9.3%

8.2%

7.3%

6.0%

1.1%

3.1%

% that are in loss with 10-year holding period

3%

10%

8%

9%

11%

18%

16%

45%

37%


We can clearly see that companies with higher Predictability Rank had much better stock performances. The possibility of losing money with long term holding period is also greatly reduced.

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Symbol Company Predictability 10-Y EBITDA Growth Rate (%) 5-Y EBITDA Growth Rate (%) 12-M EBITDA Growth Rate (%) Market Cap ($mil) P/E PE/5-Y EBITDA Growth Rate Price DCF DCEarning Yield
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
5.50 0.4041.40553.76229.0072.5012.801.303.400.00
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
8.00 38.4026.401264.84423.900.6231.72-8.2013.300.00
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
26.40 16.606.702122.04127.901.6830.5526.2031.801.30
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star (On Watch)
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
5.90 11.80-24.402262.446281.9023.8967.3828.101.401.50
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
4.90 18.5018.107824.07421.901.1867.2045.7031.501.10
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
5.30 22.1017.0033714.33527.101.23174.3066.0072.400.70
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
5.30 22.1017.0034037.60427.101.2329.1711.0012.100.40
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
13.20 8.308.3031842.48315.101.82103.1273.40183.102.20
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
8.70 6.809.401593.21612.501.8440.8016.2041.201.40
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star (On Watch)
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
13.80 6.40-11.30247623.08412.601.9762.120.00106.803.00
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star (On Watch)
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
13.80 6.40-11.30247462.26312.301.9212.310.0021.303.40
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
10.50 19.1011.507431.54021.001.10106.2037.1073.300.40
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star (On Watch)
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
19.20 38.80-75.703129.1842.000.053.590.5010.603.90
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
22.80 18.701.004860.98816.800.9035.8013.5060.603.00
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
12.70 14.5012.008982.51234.902.4144.4510.9036.301.80
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star (On Watch)
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
26.00 18.00-14.004677.2360.000.0017.5033.00-5.603.50
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
22.80 18.701.004931.59516.800.9018.166.8030.102.70
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
4.40 7.308.904790.19222.103.0333.1924.6014.401.20
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star (On Watch)
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
19.20 38.80-75.703172.7662.100.053.640.5010.602.90
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
9.30 18.7010.00346593.19415.800.84213309.00133380.80156323.500.00
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
9.30 18.7010.00329847.60715.800.84142.1793.60109.300.00
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
13.20 6.509.8010040.55925.003.8568.3737.3054.102.00
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
16.80 37.8015.1022138.80925.400.6710.687.6023.102.10
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
16.80 37.8015.1021355.24525.300.67102.7775.40231.401.10
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
13.60 26.909.8020.94119.900.747.298.902.902.20
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
22.00 12.707.307382.42029.402.3180.3283.7077.700.00
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
7.90 3.706.705677.54111.603.1422.5414.7037.204.80
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
7.90 3.706.705743.03211.603.141.140.801.805.40
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
5.00 4.704.20203.40316.103.4328.85-0.5024.102.70
Premium Member OnlyPremium Member Only
  • Currently 3/5
Business Predictability Rank: 3-Star
Back Testing Results:
Average gain of all 3-Star stocks: 8.2% per year.
% of Stocks that are in still loss if held for 10yrs: 11%.
Read more:
What is Predictability Rank?
Performances of real portfolio
Top Ranked Predictable Companies
13.80 17.5020.7015028.16225.001.43150.62159.40131.800.50

Add Notes, Comments

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User Comments

VCM
ReplyVCM - 1 month ago
I appreciate your quick response to the DCEarnings question (does not mean I agree with the use of DCEarnings -- but that is a much longer discussion. Hint: as you know, DCF was introduced many years ago as means of arriving to the SUM of DCFs for the purpose of calculating, however theoretical and impractical it may be, the intrinsic value. DCE is a notion which has the origin in DCF but a sum of DCEs is not being used by you, and should not -- thus the only justification for the use of DCE is purpoted correlation with returns, I would like to see the proof if you can.)

As to "The stocks should be there." -- indeed, the lists are being populated now.

Thank again.
Gurufocus
ReplyGurufocus - 1 month ago
hi VCM: Go to this link for a detailed explanation of DCEarnings:

http://www.gurufocus.com/term/Intrinsic%20Value%20(DE)/WMT/Intrinsic%2BValue%2B%2528DE%2529/Wal-Mart%2BStores%2BInc

The stocks should be there.
VCM
ReplyVCM - 1 month ago
In the inquiry below that I had submitted to understand this screen, the result is : total records=157, No stocks found (and no stocks were indeed displayed).

How could this be?

Thanks,
==============================================================


Total Records: 157 Page:1 2 3 4 5 6 Next Page
Default View
Map ViewNew
Charts Views
Customized View
Download to ExcelExportAdd to batch download list10-year Financial Data
No stocks found.
Total Records: 157
VCM
ReplyVCM - 1 month ago
I know what DCF is. What is DCEarning?

Thanks,
Sm2200
ReplySm2200 - 4 months ago
http://www.gurufocus.com/predictable.php

I find no list at predictable companies page

Whereas yesterday there was a list
Sm2200
ReplySm2200 - 5 months ago
How would I select stocks to sell puts on ?
Spash@twitter
ReplySpash@twitter - 11 months ago
Jvs505@yahoo.com,

Red box around a company means, "(On Watch)".
Thamesk
ReplyThamesk - 1 year ago
Red box? Any chance DCF or fair value can be a column in this or portfolio? Thks
Jvs505@yahoo.com
ReplyJvs505@yahoo.com - 1 year ago
What does red box around a company mean?



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