E Best Russell 1000 Energy Stocks According To Buffett Principles: Consider Tesoro

A Ranking system sorts stocks from best to worst based on a set of weighted factors. Portfolio123 has a powerful ranking system which allows the user to create complex formulas according to many different criteria. They also have highly useful several groups of pre-built ranking systems; I used one of them the "All-Stars: Buffett" in this article. The ranking system is based on investing principles of the well-known investor Warren Buffett.

The "All-Stars: Buffett" ranking system is quite complex, and it is taking into account many factors like; book value growth, operational P/E, price to book value, trailing P/E, price to Tangible book value, price to cash flow and EPS Stability, as shown in the Portfolio123's chart below.

In order to find out how such a ranking formula would have performed during the last 18 years, I ran a back-test, which is available in the Portfolio123 screener. For the back-test, I took all the 6,221 stocks in the Portfolio123 database.

The back-test results are shown in the chart below. For the back-test, I divided the 6,221 companies into twenty groups according to their ranking. The chart clearly shows that the average annual return has a very significant positive correlation to the "All-Stars: Buffett" rank. The highest-ranked group with the ranking score of 95-100, which is shown in the light blue column in the chart, has given the best return - an average annual return of about 13.2%, while the average annual return of the Russell 1000 index during the same period was about 3.9% (the red column at the left part of the chart). Also, the second and the third group (scored: 90-95 and 85-90) have yielded superior returns. This brings me to the conclusion that the ranking system is very useful.

After running the "All-Stars: Buffett" ranking system for all 53 Russell 1000 energy companies, on February 8, I discovered the twenty best stocks, which are shown in the table below. In this article, I will focus on the second ranked stock Tesoro Corporation (TSO).

1 2 3
View single page >> |

Disclosure: I am long TSO stock

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.
Chee Hin Teh 4 years ago Member's comment

Thanks for sharing