We'd all like to invest like the legendary Warren Buffett, turning thousands into millions or more. Buffett analyzes companies by calculating return on invested capital, or ROIC, to help determine whether a company has an economic moat -- the ability to earn returns on its money above that money's cost.
In this series, we examine several companies in a single industry to determine their ROIC. Let's take a look at Novartis (NYSE: NVS ) and three of its industry peers, to see how efficiently they use cash.
Of course, it's not the only metric in value investing, but ROIC may be the most important one. By determining a company's ROIC, you can see how well it's using the cash you entrust to it and whether it's actually creating value for you. Simply put, it divides a company's operating profit by how much investment it took to get that profit. The formula is:
Best Warren Buffett Companies To Invest In Right Now: Penn National Gaming Inc.(PENN)
Penn National Gaming, Inc. and its subsidiaries own and manage gaming and pari-mutuel properties in the United States. It operates approximately 27,000 gaming machines; 500 table games; and 2,000 hotel rooms in 23 facilities in 16 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1982 and is based in Wyomissing, Pennsylvania.
Advisors' Opinion:- [By Quickel]
Penn National Gaming(PENN) squeaked past its guidance through improved cost controls, and investors praised its efforts.
But expectations were low, and its upbeat outlook shouldn't be viewed as a message that regional markets are recovering. "Going forward, we project soft regional gaming revenue results over the next three to six months, as we do not expect to see a significant increase in consumer spending patterns given the uncertain economic environment," J.P. Morgan analyst Joseph Greff wrote in a note.
Penn National raised its full-year earnings guidance to $1.18 from $1.13 a share, and up its revenue outlook by $26 million to $2.44 billion from $2.41 billion.
During the second quarter, the company earned $9.2 million, or 9 cents a share, compared with $28.5 million, or 27 cents, in the year-ago period. Excluding items, Penn actually earned 29 cents a share, a penny higher than estimates.
Revenue rose 3% to $598.3 million, higher than the $597.1 million Wall Street projected. The upside was driven by both better revenues and margins and was generally broad-based across many properties, especially larger venues in Charlestown, Lawrenceburg and Grantville, Pa.
Penn National rolled out table games in West Virginia and Pennsylvania during the quarter, which should be a growth catalyst moving forward. The company also plans to open a slot facility in Maryland on Sept. 30 and expects its Toldeo, Ohio, location to open in the first-half of 2012. Its Columbus project is slated to open in the second-half of 2012.
The company repurchased 409,000 shares during the quarter. "[This] sends a message to investors on the value of its equity, but perhaps indicating the lack of near-term acquisition opportunities," J.P. Morgan analyst Joseph Greff wrote in a note.
Best Warren Buffett Companies To Invest In Right Now: Etrion Corp(ETX.TO)
Etrion Corporation, an independent solar power producer, engages in acquiring, developing, building, owning, and operating solar power plants in Italy. It owns 60 megawatts of operational, ground-based solar photovoltaic power plants. The company was formerly known as PetroFalcon Corporation and changed its name to Etrion Corporation in September 2009. Etrion Corporation was incorporated in 1993 and is headquartered in Geneva, Switzerland.
Top 10 Heal Care Companies To Invest In Right Now: Medidata Solutions Inc.(MDSO)
Medidata Solutions, Inc. provides software-as-a-service based clinical development solutions for life science organizations worldwide. Its solutions comprise software and services that allow customers to increase the value of their development programs by designing, planning, and managing key aspects of the clinical trial process, including study and protocol design, trial planning and budgeting, site negotiation, clinical portal, trial management, randomization and trial supply management, clinical data capture and management, safety events capture, medical coding, clinical business analytics, and data flow and interoperability. The company primarily offers Medidata Rave, a comprehensive platform for capturing and managing clinical data. It also provides Medidata CTMS, a clinical trial management solution that streamlines operational workflows; Medidata Designer, a protocol development tool that enhances the efficiency of clinical trial start-up; Medidata Insights, a busi ness analytics platform; and Medidata Balance, a randomization and trial supply management solution, which streamlines the process of developing, building, and implementing subject allocation plans. In addition, the company offers Medidata Grants Manager, an application to benchmark the investigator budgets against industry data; Medidata contract research organization (CRO) Contractor, an analytical tool for CRO outsourcing, budgeting, and negotiation; and iMedidata, a hosted portal application that allows investigative sites and sponsor study teams to start trial activities. Further, it provides hosting, support, and professional services. The company serves pharmaceutical, biotechnology, and medical device companies; academic institutions; and CROs and other entities engaged in clinical trials through a direct sales force; and through relationships with CROs and other strategic partners. The company was founded in 1999 and is headquartered in New York, New York.
Best Warren Buffett Companies To Invest In Right Now: inTest Corporation(INTT)
inTEST Corporation, together with its subsidiaries, engages in the design, manufacture, and marketing of mechanical, thermal, and electrical products. Its products are primarily used by semiconductor manufacturers in conjunction with automatic test equipment in the testing of integrated circuit (IC) or semiconductors, including microprocessors, digital signal processing chips, mixed signal devices, micro-electro-mechanical systems, application specific ICs, and specialized memory ICs, which are used in the automotive, aerospace, computer, consumer products, and telecommunications industries. The company operates in three segments: Mechanical Products, Thermal Products, and Electrical Products. The Mechanical Products segment offers manipulator products, such as in2(R), M Series, Aero Series, and Cobal Series that can hold various test heads and enable an operator to reposition a test head for alternate use with any one of various probers or handlers on a test floor. This s egment also offers docking hardware products, which protect delicate interface contacts and ensure repeatable and precise alignment between the test head's interface board and the prober's probing assembly test socket. The Thermal Products segment offers ThermoChuck precision vacuum platform assemblies, ThermoStream temperature management tool, and MobileTemp Series to offer thermal test systems, as well as offers Thermal Chambers and Platforms. The Electrical Products segment provides various tester interfaces that provide electrical connections between the tester and the wafer prober or IC handler to carry electrical signals between the tester and the probe card on the prober or the test socket on the handler. The company sells its products directly, independent and commissioned sales representatives, and distributors to semiconductor manufacturers and semiconductor test subcontractors worldwide. inTEST Corporation was founded in 1981 and is headquartered in Mount Laurel, New Jersey.
Best Warren Buffett Companies To Invest In Right Now: Rowan Companies Inc.(RDC)
Rowan Companies, Inc. provides onshore and offshore oil and gas contract drilling services in the United States and internationally. The company offers its contract drilling services through its fleet of 28 self-elevating mobile offshore drilling platforms and 30 deep-well land drilling rigs. The company was founded in 1923 and is headquartered in Houston, Texas.
Advisors' Opinion:- [By Bobby Raines]
Rowan provides offshore contract oil and gas drilling. The company is building three new drilling ships and recently announced a three-year contract for the first one. It seems likely that the company will have no problem finding work for the other two ships as well. The stock had a rough Spring, but recovered to levels close to its 52-week high in September before sliding during the Fall, but it has been moving higher since the start of 2013. The company has a five-year EPS growth rate of 36.22% and is trading at 118% of its 52-week low.
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