Warren Buffett wouldn’t buy these FTSE 100 stocks. Neither would I

first_imgSimply click below to discover how you can take advantage of this. Edward Sheldon, CFA | Wednesday, 25th November, 2020 | More on: AV BT-A TW One of the secrets to Warren Buffett’s success is that he’s very selective about his investments. He only invests in businesses that have competitive advantages, strong balance sheets, and excellent track records when it comes to generating shareholder wealth.Here, I’m going to look at three FTSE 100 companies that I believe Warren Buffett wouldn’t invest in today. He wouldn’t buy these Footsie stocks and neither would I.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Warren Buffett doesn’t like debtBT (LSE: BT.A) is a popular stock within the UK investment community. However, I don’t think Warren Buffett would be interested in buying it.One reason I think Buffett would steer clear is the company’s high debt levels. In the half-year report, BT detailed net debt of £17.6bn. Meanwhile, equity on the balance sheet was just £12bn. Buffett wouldn’t be impressed with that debt-to-equity ratio.Another reason I think he would swerve BT is that it doesn’t generate a high level of profitability. Over the last three years, for example, return on capital employed (ROCE) has averaged 8.7%. By contrast, his top holding, Apple, has averaged a ROCE of 28.7% during that period.Given BT’s debt and lack of profitability, I think Buffett would be more than happy to put this FTSE 100 stock in his ‘no’ pile.No economic moatAnother FTSE 100 company that I believe he wouldn’t invest in today is Aviva (LSE: AV). Buffett does like the insurance sector. Currently, he owns a number of major insurers. However, I think Aviva is an insurance stock he’d leave alone.The reason I say this is that it doesn’t really have a competitive advantage (or economic moat as Buffett likes to call it). It doesn’t have an edge over the competition that can help it protect profits.Now, Aviva’s new CEO, Amanda Blanc, is looking to shake things up. She’s confident that she can turn the FTSE 100 insurer into a “winner.” However, we’ve seen this kind of thing before with Aviva and the company has failed to deliver. Just look at its chart. It says a lot about the company’s poor long-term track record.Overall, I don’t think the legendary investor would be interested in Aviva shares.Poor long-term investmentFinally, housebuilder Taylor Wimpey (LSE: TW) is a third FTSE 100 stock that I believe Warren Buffett wouldn’t invest in.At first glance, Taylor Wimpey does have a lot of Buffett-like attributes. For example, it has a strong balance sheet with minimal long-term debt. He would like that. Profitability has also been high recently. Over the last three years, ROCE has averaged 20%.However, I believe the highly cyclical nature of the housebuilding industry would be a turn-off for Buffett here. During periods of economic weakness, housebuilders tend to get hit hard. This means that they’re generally not great long-term investments. Just look at a long-term chart for the share. Currently, Taylor Wimpey’s share price is nearly 50% below its 2007 peak.Warren Buffett tends to go for stocks that are almost guaranteed to be bigger in 10 or 20 years’ time. For this reason, I think he’d pass on this FTSE 100 stock. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Warren Buffett wouldn’t buy these FTSE 100 stocks. Neither would I Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Image source: The Motley Fool Our 6 ‘Best Buys Now’ Sharescenter_img “This Stock Could Be Like Buying Amazon in 1997” I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Edward Sheldon owns shares in Apple. The Motley Fool UK owns shares of and has recommended Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Enter Your Email Address Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. See all posts by Edward Sheldon, CFAlast_img

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