A number of major European businesses offer the kind of valuations and growth potential that would appeal to legendary US investor Warren Buffett, according to France’s CA Cheuvreux, part of the Crédit Agricole Goup.

In a “Letter To Warren Buffett”, the firm focuses on industries typically favoured by the investor (insurance, apparel retailing, food, household, personal care) and two that seem “particularly attractive in Europe” (capital goods and automotives). As a result, Cheuvreux says its preferred firms are Zurich, AXA; H&M; Unilever, ABB, Volkswagen and Daimler.

Buffett, sometimes dubbed the Sage of Omaha, has achieved fame by amassing a personal fortune of $31.2 billion (Source: Sunday Times Rich List 2011) over several decades. Buffett is known as an advocate of “value investing” as established by Benjamin Graham and David Dodd of the Columbia Business School, albeit with new twists of his own. Buffett has not been averse to controversy: earlier this year, he claimed he paid less tax, in percentage terms, than his secretary and argued for a new wealth tax to be levied on the wealthy, attracting the wrath of some conservative politicians and commentators.

The Cheuvreux letter states that Warren Buffett selects equity securities in the same way he choose a business before buying it: 1) businesses that he can understand; 2) favourable long-term prospects; 3) businesses operated by honest and competent people; and 4) a very attractive price (Source: Buffett's Letter to Berkshire Shareholders, 1977).

However, Cheuvreux argues that Buffett “remains highly US oriented, neglecting several European champions”.

“Mr Buffett’s success speaks for itself, but has been highly US oriented (the US represents around 94 per cent of Berkshire Hathaway assets vs just 4 per cent for Europe). Looking at the industries in which Mr Buffett has invested over time, we see quite a few European champions.”

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