According to the All-in-One Screener, a Premium feature of GuruFocus, four companies that have high profitability, business predictability and free cash flow growth are Autohome Inc. (ATHM, Financial), Masimo Corp. (MASI, Financial), Monolithic Power Systems Inc. (MPWR, Financial) and Synopsis Inc. (SNPS, Financial).
Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) CEO Warren Buffett (Trades, Portfolio) said that the Omaha, Nebraska-based insurance conglomerate looks for four key criteria of good companies: understandable business, favorable growth prospects, honest and competent management, and attractive share prices.
GuruFocus' "Profitable Predictable Margin Expanders" screen lists companies that have a financial strength rank of at least 8, a profitability rank of at least 7, a business predictability rank of at least three stars and a five-year operating margin growth rate of at least 5%.
The Screener listed four profitable, predictable margin-expanding companies with 10-year free cash flow growth of at least 6%.
Autohome
Autohome (ATHM, Financial) delivers comprehensive, independent and interactive content to automobile buyers and owners. GuruFocus ranks the Beijing-based company's profitability 9 out of 10 on several positive investing signs, which include a three-star business predictability rank and an operating margin that has increased approximately 7.2% per year on average over the past five years and is outperforming over 90% of global competitors. Additionally, the company's free cash flow has increased over 17% per year on average over the past five years and more than 25% per year on average over the past 10 years.
Gurus with large holdings in Autohome include Jim Simons (Trades, Portfolio)' Renaissance Technologies, Ray Dalio (Trades, Portfolio)'s Bridgewater Associates and Jeremy Grantham (Trades, Portfolio)'s GMO.
Masimo
Masimo (MASI, Financial) develops signal processing algorithms to measure blood oxygenation levels through pulse oximetry. GuruFocus ranks the Irvine, California-based company's financial strength and profitability 9 out of 10 on several positive investing signs, which include a double-digit Altman Z-score, interest coverage and debt ratios that outperform over 86% of global competitors and an operating margin that has increased approximately 5.2% per year on average over the past five years.
Masimo's free cash flow has increased approximately 12% per year on average over the past 10 years. Gurus that are riding the company's high profitability include Mario Gabelli (Trades, Portfolio)'s GAMCO Investors Inc. (GBL, Financial) and Bridgewater Associates.
Monolithic Power Systems
Monolithic Power Systems (MPWR, Financial) designs power systems for a wide range of end markets, including industrial, automotive, computing, storage and communications. GuruFocus ranks the Kirkland, Washington-based company's profitability 9 out of 10 on several positive investing signs, which include profit margins and returns outperforming over 85% of global competitors.
Monolithic Power's free cash flow has increased over 20% per year on average over the past 10 years.
Synopsis
Synopsis (SNPS, Financial) produces and markets electronic design automation software products. GuruFocus ranks the Mountain View, California-based company's profitability 9 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, a five-star business predictability rank and an operating margin that has increased approximately 6.7% per year on average over the past five years and is outperforming over 85% of global competitors.
Disclosure: No positions.
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