WWBD? - What Would Buffett Do?

MorningStar has some pre-set screens to help people get started in their stock search and one of the screens is called Warren Buffet Stocks so, I figured it was worthwhile to investigate. According to the description

"Investing legend Warren Buggett looks for companies with strong competitive advantages--or what he calls economic moats. Here, we look for companies that our analysts classify as having either a wide or narrow economic moat. Like Buffett, we also look for companies with positive free cash flows and good returns on capital. "

I was unable to find an exact definition of a narrow moat but, many companies don't have moats at all so for right now I'm guessing a narrow moat is better than no moat. Concerning the free cash flow, the screen looks for companies with positive cash flow for the last 4 years and a return on equity that exceeds 10% for the last 3 years. This results in 351 stocks that pass his screening but doesn't leave me with that warm & fuzzy feeling since I haven't heard of so may of the companies.

So, to pare it down a bit, I add a morning star rating of 5 stars which brings our total down to 37 stocks. If I rank these 37 stocks in order of risk we find 12 companies which most people should recognize and most of which appear in the indexes already being tracked.

The 12 lowest risk, 5 Star Warren Buffett Stock Picks

Company	Symbol
3M	MMM
Anheuser-Busch	BUD
Coca-Cola	KO
Expeditors International	EXPD
ExxonMobil	XOM
Home Depot	HD
Microsoft	MSFT
Western Union	WU
United Parcel Service	UPS
Wal-Mart	WMT
Washington Post	WPO
Wrigley	WWY

It just so happens that all of these Low Risk rated stocks have a wide economic moat.

Also, all of these stocks appear in the Warm & Fuzzy index (WARM) which consist of 18 stocks that pass the criteria of 5 Stars, Low Risk, Wide Moat. The other six stocks in the WARM index which didn't pass either the free cash or 10% return on equity requirements to make it on the Buffett list are Berkshire Hathaway (how ironic!), Biomet, eBay, Fastenal, Johnson & Johnson and Medtronics.

The remaining stocks in the modified Buffett list are all Medium Risk except for one high risk stock (Ternium SA ADR). Without benefit of a table the remaining stocks are as follows;

Analog Devices
Apollo Group A
Applebee's International
Avon
Carpenter Technology
Dell
Euronet Worldwide
France Telecom SA ADR
Gannett
Getty Images
Journal Communications A
Journal Register
Labor Ready
MSC Industrial Direct Co.
Maxim Integrated Products
New York Times A
Reliance Steel and Aluminum
Telecom Corporation of New Zealand
Timberland
Tuesday Morning
UTi Worldwide
Yahoo
Zebra Technologies
Ternium SA ADR