7 stocks that fit Warren Buffett's buying criteria ahead of Berkshire's annual meeting

Published Fri, May 5 202312:21 PM EDT

When Warren Buffett takes the stage at Berkshire Hathaway's annual meeting in Omaha on Saturday, he'll have a lot to talk about. The 92-year-old investor has had a busy year. He snapped up additional shares of one of his favorite energy plays, Occidental Petroleum , on several occasions — including in March. That brings the conglomerate's stake in the energy producer to 23.5%. In April, Buffett raised Berkshire Hathaway 's stakes in five Japanese trading houses to 7.4% each. He told CNBC's Becky Quick when he first bought the names two years ago, he thought they were selling at a "ridiculous price" and was "confounded" by the opportunity. The "Oracle of Omaha" may also face questions at the meeting about potential acquisitions. His last big purchase was insurance company Alleghany for $11.6 billion, which closed in October. In the past, Buffett has laid out his criteria for acquisitions, noting that he looks for companies with at least $75 million in pretax earnings. He also prefers those that have demonstrated consistent earnings power, as well as good returns on equity. "We would like to make an acquisition in the $5-20 billion range," he wrote in his 2014 annual report . Berkshire is currently sitting on $128.6 billion in cash , as of Dec. 31. While Buffett's next acquisition is anyone's guess, CNBC Pro sought to identify names that fit the criteria he looks for when buying a company, with slight tweaks. We looked for those that are in that $5 billion to $20 billion range — large, but not too large. They are also consistently profitable, with a compound annual growth rate in net income of at least 10%. The names have less than 20% debt and a return on equity greater than 20%. The result was companies in sectors ranging from technology to finance, and included some under-the-radar names. Robert Half International checks off all the boxes, with its market cap of $7.4 billion, net income CAGR of 12.2%, return on common equity of nearly 45% and about 15% debt to equity. The talent solutions and business consulting firm is down nearly 7% so far this year. If Buffett were looking to add a tech name as a Berkshire subsidiary, there are three that fit his criteria — Monolithic Power Systems , Teradyne and Paycom Software . Monolithic Power Systems is near the top end of his range with its $22 billion market cap. The company, which provides semiconductor-based power electronics solutions, has very little debt and a net income CAGR of 39.4%. MPWR YTD mountain Monolithic Power Systems Monolithic reported a first-quarter earnings and revenue beat on Friday. Adjusted earnings per share came in at $3.00, compared with the $2.98 expected from analysts polled by StreetAccount. However, its revenue guidance for the second quarter of $430 million to $450 million came in below estimates of $455.4 million. Shares are up about 14% year to date. Two finance companies also made the list — payment processor Jack Henry & Associates and electronic trading platform MarketAxess Holdings . On Tuesday, Jack Henry reported earnings per share of $1.12 for its fiscal third quarter, topping estimates of $1.10 per share, from StreetAccount. Its revenue also beat, coming in at $508.6 million versus the $500.7 million expected. Shares of Jack Henry are down 13%, while MarketAxess' stock is up about 7%.