The Buffett Lens

Well, howdy there, neighbor. It's Warren Buffett here, sittin' on my porch with a cup of coffee, thinkin' about businesses that feed the world—like CF Industries. You know, it's a lot like that old farmer who grows the best corn in the county. He doesn't get fancy with his tools; he just knows the soil, the seasons, and how to make the land produce year after year. CF does somethin' similar—they make ammonia and nitrogen fertilizers that help farmers grow the crops we all eat. It's basic stuff, but without it, well, let's just say our dinner plates would look a lot emptier.

Now, let's talk about what makes this company tick, in ways that align with the principles I've always held dear. First off, CF has shown some real consistent earnin' power. Over the last eight quarters, they've gone from zero revenue and income to nearly $1.9 billion in revenue and $0.4 billion in net income per quarter—that's like a business startin' from scratch and hittin' its stride. Lookin' at the last four quarters, they're pullin' in $7.1 billion in revenue and $1.5 billion in net income. Their return on equity? A sturdy 30.1%, and over five years, it's averaged 21.9%. That's the kind of performance I like to see—not just earnings per share chasin', but a high return on the capital they've put to work, without loadin' up on debt. Their debt-to-equity ratio is just 0.75 times, which means they're not borrowin' recklessly to make the numbers look good. Reminds me of that old sayin' from my 1979 letter: the real test is earnin' a high rate on equity capital, and CF is passin' it, even in a world where inflation can eat into returns like a hungry goat on a tin can.

And speakin' of moats—wide ones, at that—this company has got a castle-like protection with a score of 72.5 out of 100, thanks to cost advantages and smart access to resources. In a business like fertilizers, where you're dealin' with ammonia and urea that the world needs for food production, havin' a moat means you can fend off competitors who might try to undercut you. It's not about rowin' the boat harder, as I said in 1985; it's about gettin' into a boat that floats well on its own. CF's in a good boat here, with global operations in North America, Europe, and beyond, servin' farmers and traders alike.

But let's be humble, as we always should. No business is perfect, and CF has its shortcomings. The management side? Insider ownership is just 0.7%, which means the folks runnin' the show don't have a ton of skin in the game personally. That's not ideal for me—I'm more comfortable when managers are eatin' their own cookin', so to speak. And the sector's basic materials, which can be volatile. Fertilizer prices swing with the weather, global demand, and commodity markets. If crops fail or economies slow, revenues could dip. Plus, while their moat is solid, it's not invincible; new tech or regulations could pop up like weeds in a garden. We saw in my 1996 letter that growth rates can't be matched forever, and market ups and downs affect reported earnings. CF's no exception—past performance is no guarantee, and we have to temper our expectations.

Still, lookin' long-term, this seems like a sensible buy at today's price of $126.73 and a market cap of $19.8 billion. With a P/E of 9.8 times, P/B of 2.9, and EV/EBITDA at 4.8, it's priced reasonably for what it does. Their Buffett score of 72.1 out of 100 lines up nicely with my factors: strong earnin' power, high ROE with manageable debt, and that economic moat. In a world that's always needin' more food—and fertilizers are key to that—CF could keep deliverin' value over the years. It's about patience, like waitin' for a tree to bear fruit. If you're thinkin' of plantin' some shares here, remember, invest for the long haul and only with money you can afford to leave alone.

For those lookin' to act on this, the ticker for CF Industries Holdings, Inc. on eToro is $CF. Happy investin', and remember, it's better to buy a wonderful business at a fair price than a fair business at a wonderful price.

Well, howdy there, neighbor. You know, I've always said that investing is like farming – you plant seeds in good soil, tend to them patiently, and hope for a bumper crop without getting washed away by the first rainstorm. Today, I'm taking a gander at Advanced Drainage Systems, Inc., a company that reminds me of a trusty old irrigation system on a family farm. It's the kind of outfit that quietly keeps things flowing, whether it's draining rainwater from fields or managing wastewater in cities. These folks design and make those corrugated plastic pipes and water products that help keep our landscapes dry and our infrastructure humming. Not the flashiest business, but as steady as a well-built barn in a hailstorm.

Let me chew on what makes this company tick, using the yardsticks I've always favored. First off, they've got a solid record of earning power. Over the last eight quarters, revenues have held pretty steady around $700 million each, and net income has hovered in the $100 million range. That's like a cow that keeps producing milk year after year without much fuss. Their return on equity clocks in at 23.5% lately, with a five-year average of 24.1% – not too shabby. As I wrote back in 1979, it's all about earning a good rate on the capital you put to work, without piling on debt like a gambler at the table. This company's debt-to-equity ratio is a reasonable 0.72 times, so they're not leveraged to the hilt, which gives me comfort. They've built a wide moat around their business, much like a castle with high walls, thanks to long-term contracts and the hassle of switching suppliers – folks don't just swap out pipe systems on a whim. That moat score of 70.9 out of 100 tells me they've got some staying power. And the management? They own a decent chunk of the company themselves (6.8% insiders), which aligns with my view from 1990: give talented folks a good environment, and they'll create value. It's the business economics that shine here more than any managerial fireworks.

Of course, no farm is without its weeds, and I wouldn't be honest if I didn't point out a few shortcomings humbly. This is a cyclical business tied to construction and infrastructure spending, so if the economy hits a rough patch – say, fewer homes being built or cities tightening their belts – revenues could dip. Inflation could nibble at margins, just like I mentioned in that 1979 letter, where even solid earnings can turn into a loss if prices keep climbing. And while their debt isn't excessive, it's not zero either; a big downturn might test their balance sheet. Competition from other pipe-makers or new materials isn't going away, and they're expanding internationally, which adds some unknowns, like dealing with different regulations or currencies. Their market cap of $10.5 billion feels fair, but at a P/E of 25.1 times and P/B of 5.9 times, it's not exactly a bargain basement deal. Still, that Buffett Score of 71.9 out of 100 suggests it's got a lot going for it.

Looking ahead, I see real long-term potential here. Water management is one of those forever needs – think climate change pushing for better drainage, or aging infrastructure begging for upgrades. The company's been growing steadily, with last twelve months' revenue at $3 billion and net income at $500 million, and they've got segments like infiltrators and allied products that could keep expanding. If you can buy in at a reasonable price, like the current $135.39 share price, and hold on with patience – because good things take time – this could be a sensible addition to your portfolio. It's not about chasing the latest fad; it's about owning a piece of a business that earns well, stays out of trouble, and compounds value over decades. As I noted in 1996, intrinsic value matters more than book value or market swings, and this outfit seems built to deliver that. For those looking to act on this, the ticker for Advanced Drainage Systems, Inc. on eToro is $WMS. Just remember, invest like you own the farm – wisely and for the long haul.

Well, howdy there, neighbor. You know, I've always said that investing is a bit like farming—you plant seeds today for a harvest you hope to reap years down the road, and you don't get too excited about every rain shower or sunny day along the way. Today, let's talk about PPG Industries, a company that's been in the business of painting and protecting the world for over a century. Imagine them as the folks who slap on the paint to keep your house looking spiffy or coat the bridges so they don't rust away in the rain. It's a solid, everyday business that folks might not think about much, but it's as essential as a good roof over your head. PPG makes paints, coatings, and specialty materials, selling them across the globe in places like the U.S., Europe, and even the Asia Pacific. They divide their work into three main buckets: stuff for homes and buildings (like your kitchen walls), performance coatings for cars and trucks, and industrial coatings that keep machinery humming. It's not flashy, but it's the kind of steady work that builds wealth over time, much like tending a well-planted orchard.

Now, let's see how this outfit stacks up against the principles I've lived by for decades. First off, the primary test of any business, as I wrote back in 1979, is earning a high return on the equity capital it employs, without piling on debt or playing accounting games. PPG's latest return on equity is a respectable 19.8%, which is darn good—better than what you'd get from a savings account. Over the last five years, though, it's averaged just 3.5%, which tells me they've had some choppy waters, probably from economic ups and downs. Still, that recent figure suggests the business is rowing well right now. And speaking of leverage, their debt-to-equity ratio is 0.99 times, which isn't reckless—it's like borrowing to buy a tractor but not mortgaging the whole farm.

What really caught my eye is their economic moat, that wide ditch around the castle that keeps competitors at bay. PPG scores a strong 72.2 out of 100 here, thanks to cost advantages and smart access to resources. They've got scale in manufacturing coatings, which means they can produce stuff cheaper than the little guys trying to muscle in. It's like owning a big ol' herd of cattle that keeps the wolves away from your ranch. And as I noted in 1985, a good business boat matters more than how fancy the oars are. PPG's got a sturdy vessel in the basic materials world, where demand for paints and coatings sticks around even in tough times—people keep building and repairing, after all.

On the management side, it's mixed. Their insider ownership is mighty low at just 0.1%, which means the folks running the ship don't have much skin in the game personally—unlike some family-owned outfits I've favored. Institutional investors hold 91.4%, so the big money managers are watching closely. But remember, in 1990, I said much of the extra value comes from talented managers we identify and give room to shine. PPG's team seems to be doing just that, driving that high ROE without undue leverage. They've grown revenue to $15.9 billion over the last four quarters and net income to $1.6 billion, showing they can weather storms and come out painting.

That said, no business is perfect, and I wouldn't be honest if I didn't mention the shortcomings. Their five-year average ROE being so low hints at volatility—earnings can swing with the economy, like a weathervane in a gusty wind. Inflation or downturns in construction and auto sales could pinch them, and while their moat is nice, it's not impenetrable; new technologies or cheaper imports could sneak in. Valuation-wise, with a price-to-earnings ratio of 16.3 times and price-to-book of 3.2 times, it's not screaming "bargain" at today's $100.78 share price, but it's not wildly expensive either. Their Buffett Score of 71.3 out of 100 is solid, but as I cautioned in 1996, we focus on intrinsic value, not just numbers on a page, and past growth rates might not repeat forever.

All in all, PPG strikes me as a sensible long-term hold for the patient investor. This is a company in a durable industry—coatings aren't going away anytime soon, whether it's fixing up your porch or keeping airplanes from corroding. At current prices, it offers decent value if you believe in the fundamentals: steady demand, a reasonable balance sheet, and that protective moat. Buy it like you'd buy a good piece of land—expect to hold it through seasons of plenty and lean, and let compounding do the work. Patience is key; markets fluctuate, but solid businesses endure. For those looking to act on this, the ticker for PPG Industries, Inc. on eToro is $PPG. Take care, and keep investing wisely!

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Ah, my friend, if you've ever watched a painter slap on a fresh coat of paint or a builder seal up a roof against the elements, you know there's a quiet magic in the products that keep our world from falling apart. RPM International Inc. is a bit like that reliable handyman you call when the weather turns nasty—providing specialty chemicals and solutions that waterproof homes, seal cracks in buildings, and keep things running smooth in construction, industry, and everyday consumer needs. It's not the flashiest business, but it's one that folks depend on year in and year out, much like a good pair of boots that outlasts the fads.

Now, let's talk about what makes RPM tick in a way that aligns with the principles I've always preached, like focusing on businesses with real staying power and managers who know how to row their boat well. First off, this company's got consistent earning power that's as steady as a grandfather clock. Over the past eight quarters, revenues have hovered around $1.8 billion to $1.9 billion, and net income has been right there at about $0.2 billion per quarter. That adds up to a solid $7.6 billion in revenue and $0.7 billion in net income over the last four quarters alone. It's not shooting for the moon, but it's earning money at a clip that doesn't rely on fancy accounting tricks or piling on debt. Their return on equity sits at 21.3%, and over the past five years, it's averaged 22%—that's a healthy rate, meaning they're turning shareholder dollars into profits without needing to borrow a fortune. And with a debt-to-equity ratio of just 0.92 times, they're not over-leveraged, which is like having a strong foundation under your house instead of building on quicksand.

RPM's got a decent economic moat too, scoring 73.2 out of 100, thanks to cost advantages and good access to resources. It's not an impenetrable fortress, but it's like a castle with a moat wide enough to keep most competitors at bay. They provide essentials—waterproofing, sealants, and roofing systems—that businesses and homeowners need, whether the economy's booming or just plodding along. As I often say, a good business is more about the boat you're in than how hard you row, and RPM seems to be in a solid vessel with strong fundamentals.

That said, I'm not one to sugarcoat things, and RPM has its shortcomings. Management quality is a mixed bag—insider ownership is low at just 1.3%, which might mean the folks running the show aren't as personally invested as I'd like, though institutional ownership at 83.7% suggests smart money sees value here. Valuation-wise, it's not screaming "bargain" at a P/E of 19.9 times, a P/B of 4.2 times, and an EV/EBITDA of 14.3 times. Those numbers are reasonable, but they're not the fire-sale prices I dream about. And while their Buffett Score of 70.2 out of 100 is respectable, it reminds me that no business is perfect. RPM could face headwinds from economic slowdowns, since construction and industrial demand can wane, or from rising raw material costs if suppliers tighten up. It's the kind of company that thrives in stability but might stumble if inflation or competition heats up unexpectedly.

Still, for the long haul, I see real potential here. RPM is in a sector—basic materials—that provides the nuts and bolts of our economy, and their focus on specialty chemicals means they're not just chasing the latest trend but serving timeless needs. With earnings growing steadily and a market cap of $12.7 billion at $98.86 a share, it feels like a sensible buy for patient investors willing to hold through ups and downs. As I've always emphasized, it's better to buy a wonderful business at a fair price than a fair business at a wonderful price—and RPM fits that bill if you're thinking in terms of years, not months. Just remember, investing is like farming: you plant seeds and wait for the harvest, not checking the crops every day.

For those looking to act on this, the ticker for RPM International Inc. on eToro is $RPM.

My fellow investor, if you've ever watched a farmer tilling his land and suddenly striking oil instead of corn, you might have a sense of what Ovintiv Inc. is all about. This isn't some fly-by-night operation; it's a solid oil and gas exploration and production company that's been digging deep in North America's richest fields for years. Picture them as the hardworking folks who know how to pull black gold from the ground in places like the Permian Basin in West Texas, the Anadarko in Oklahoma, and the vast stretches of northwest Alberta and northeast British Columbia. They're not just poking around; they're producing oil, natural gas, and NGLs, and they've built a business that generates real cash flow from the earth itself. At a current price of about $56 a share and a market cap of $15.9 billion, it's worth taking a closer look, much like I'd inspect a neighbor's well-kept barn before deciding if it's a sound investment.

Now, let's talk about what makes Ovintiv tick in a way that aligns with the principles I've always held dear—focusing on businesses that earn a good return on the money invested in them, without a lot of fancy footwork or borrowed dollars. One of my big tests for any company is whether it can deliver a high earnings rate on its equity capital, and Ovintiv passes that with a current return on equity of 11.1%. That's not just some flashy number; over the last four quarters, they've raked in $1.2 billion in net income on $8.9 billion in revenue, showing they can turn a profit even in a tough energy world. And they've done it with a debt-to-equity ratio of just 0.57 times, which means they're not piling on leverage like some folks load up on credit cards for a big shopping spree. This keeps things stable, avoiding the kind of accounting shenanigans or undue borrowing that can sink a ship in rough seas.

Another thing I like is their economic moat—that's just a fancy way of saying they've got a strong edge that protects them from competitors, like a sturdy fence around a prize-winning garden. With a moat score of nearly 79 out of 100, Ovintiv benefits from its asset base in prime locations and cost advantages that let them produce oil and gas more efficiently than many others. It's like owning the best fishing spots on the lake; not everyone can just waltz in and compete. Their management seems to have the rowing skills too, though I'd always prefer to see more insiders with skin in the game—here it's only 0.5%, which is modest, but with institutional ownership at 84.9%, there's plenty of smart money keeping an eye on things. As I've said before, a good managerial record often comes from picking the right business boat, and Ovintiv's been steered into waters with solid fundamentals.

Of course, no investment is without its bumps, and I'd be remiss not to mention the risks humbly, as I always do. The energy business is cyclical, like the tides coming in and out, and oil prices can swing wildly based on global events, supply, or demand. Ovintiv's average return on equity over the past five years has been just 1.4%, a far cry from that current 11.1%, reminding us that past performance isn't a guarantee—it's more like a weather forecast that can change. Their valuation looks reasonable, with a price-to-earnings ratio of 9.9 times and an enterprise value to EBITDA of 5.6 times, but in a sector prone to booms and busts, patience is key. It's not like buying a farm where you know the soil will produce year after year; sometimes the well runs dry, and you have to wait for the next gusher.

All that said, I see long-term potential here for those with a steady hand and a willingness to ignore the market's short-term noise. Ovintiv's got the kind of consistent earning power that could weather storms, and at these prices, it reminds me of buying into a good business when the crowd's not paying full attention. If energy demand keeps growing—as it has for decades, driven by our world's needs—companies like this could be real winners. The key is holding on, compounding returns over time, and not getting spooked by every dip in the road. It's not about timing the market but owning a piece of a business with intrinsic value that grows steadily. For those looking to act on this, the ticker for Ovintiv Inc. on eToro is $OVV. Stay curious, my friend, and invest like you're planting seeds for a bountiful harvest.

Sincerely, Warren Buffett