My friend, Stanley, pointed me to the above article, written by the Oracle of Omaha.Below is an extract from http://www.streetauthority.com/warren_buffett.asp
Below are a few other characteristics that Buffett looks for when evaluating an investment opportunity:
Easy-to-Understand Businesses
One of Warren Buffet's principles is not unlike Peter Lynch's -- stick with what you understand and choose investments with which you are comfortable.
High Return on Equity (ROE)
Buffett emphasizes return on equity (ROE), a key measure of a company's profitability. He prefers to invest in companies where he can confidently forecast future ROEs at least 10 years out.
Consistently Strong Free Cash Flow
Buffett also seeks companies with significant free cash flow. Always mindful of the risks associated with investing, he ensures that his companies have plenty of money left over to invest in their growth after they have paid the bills.
Limited Debt
In the 1990s, Buffett bought insurers Geico and General Re because he liked how the companies limited and managed their debt.Buffett also likes the "float" that insurance companies offer. Policyholders pay premiums up front, but claims are paid out later -- providing insurance companies with a steady stream of low-cost cash to play with.
Quality Management
Among the most noteworthy aspects of Buffett's stock-picking expertise is that he looks for quality companies with quality management teams. When Buffett buys a business, he buys its management as well. Buffett looks for people who are as passionate about their business as he is about investing.
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