The Best Companies to Invest in According to Warren Buffett's Theory

The Best Companies to Invest in According to Warren Buffett's Theory

Discover the best companies to invest in according to Warren Buffett's theory. Keep reading this article to find out all the details. Read on!

Discover the best companies to invest in according to Warren Buffett's theory. Keep reading this article to find out all the details. Read on!

Warren Buffett is one of the great investors and his word is always welcome when it comes to financial markets. If we rely on one of his theories, we will find Home Depot, Apple and Microsoft the best companies to invest in at the moment, according to Brian Pacampara at Yahoo Finance.

As Berkshire Hathaway CEO Warren Buffett once said, "The best business to own is one that over a long period of time can employ large amounts of incremental capital at very high rates of return."

Warren Buffett is one of the great investors and his word is always welcome when it comes to financial markets.

With that in mind, here are three companies with returns on invested capital greater than 15%.

Home Depot

Home Depot consistently generates returns on invested capital of around 30%.

Thanks to the home improvement giant's enormous economies of scale, well-recognized branding, and concise marketing, management has been able to produce above-average operating metrics while rewarding shareholders in the process.

Over the past five years, the company has returned more than $ 55 billion to shareholders in the form of dividends and share buybacks.

Apple

Apple, the consumer technology giant, has a five-year return on invested capital of 26%, much higher than rivals such as Nokia (12%) and Sony (7%).

Even in the ruthless world of consumer hardware, the iPhone maker has been able to generate outsized returns due to its brand dominating loyalty and high switching costs (the iOS experience can only be obtained through Apple products).

Apple, the consumer technology giant, has a five-year return on invested capital of 26%, much higher than rivals such as Nokia (12%) and Sony (7%).

Microsoft

With a solid five-year return on average 20% invested capital, software giant Microsoft rounds out the list.

While Microsoft is considered by many to be a slow and heavy tech game these days, the company's still monopolistic position with Windows and Office, coupled with an expanding presence in the fast-growing public cloud space, gives companies stocks a solid risk / reward.

For the June quarter, net revenue increased 47% to $ 16.5 billion while revenue increased 21% to $ 46.2 billion. The company's smart cloud segment increased 35% to $ 3.9 billion driven in large part by strong demand for its key cloud computing service, Azure.

More importantly, gross margin expanded 25% during the quarter, suggesting that Microsoft's competitive position is only getting stronger.

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