Monday, 18 December 2023
by Earn Media
Even Warren Buffett wouldn’t buy every stock in Berkshire Hathaway‘s (NYSE: BRK.A) (NYSE: BRK.B) portfolio at this point. We know that for sure for a simple reason: He hasn’t been scooping up more shares of most of them.
However, there are some stocks that Berkshire owns that a strong case could be made that the Oracle of Omaha should still be buying. Here are three no-brainer Buffett stocks to buy right now.
Buffett (or, more likely, one of his two investment managers) trimmed Berkshire’s position in Amazon (NASDAQ: AMZN) a little in the third quarter of 2023. I think, though, that this is absolutely a Buffett stock worth buying.
For one thing, Amazon has become a profit machine of late. Throughout much of its history, posting big profits wasn’t much of a priority for the company. Now, however, Amazon’s management is laser-focused on the bottom line — and it shows. In Q3, the company’s earnings more than tripled year over year to $9.9 billion.
More importantly, Amazon’s growth prospects look terrific despite the company already claiming a lofty market cap north of $1.5 trillion. I’m especially optimistic about the opportunities for Amazon Web Services (AWS). The generative AI boom should continue for years to come. As the leading cloud services platform, AWS is poised to be a prime (no pun intended) beneficiary.
I also like that Amazon continues to adhere to the “it’s still day one” philosophy preached by founder and former CEO Jeff Bezos. The company is still expanding into new markets, as evidenced by its recent moves into primary care and selling cars online. Bezos used to say rhetorically to other companies, “Your margin is my opportunity.” His words still ring true for Amazon.
There’s no question that Buffett likes Bank of America (NYSE: BAC) quite a bit. It’s the second-largest holding in Berkshire’s portfolio. He even added to the position earlier this year.
The price is right for Bank of America, in my view. The big bank’s shares trade at a forward earnings multiple of under 9.3. Its price-to-book ratio is only 0.94. This attractive valuation is due in large part to the banking crisis that’s still weighing on many bank stocks. However, BofA doesn’t face the same risks that smaller banks do with its rock-solid balance sheet.
Some might question that Bank of America is a no-brainer stock to buy right now because of the potential that a recession is coming. But the economy appears to be humming along nicely with inflation moderating, reasonable job growth, and a robust gross domestic product.
Even if the U.S. economy enters into a recession, Bank of America is built to weather such storms. The company stands out as one of the most innovative banks in the world. Its continued investment in technology should enable BofA to remain a global financial leader for years to come.
Buffett invested heavily in housing stocks in Q2 of 2023. D.R. Horton (NYSE: DHI) ranks as the biggest purchase of the group, with Berkshire now owning nearly 6 million shares.
The stock has been a huge winner this year, skyrocketing over 60%. Even with this sizzling performance, though, D.R. Horton’s valuation is more than reasonable with its forward earnings multiple below 10.7.
I think the near term could bring good news for the company. The latest CNBC Fed Survey found that most economists look for interest rate cuts to begin in June 2024. If they’re right, we could see new housing construction take off yet again.
The long-term looks great for D.R. Horton, too. There’s still an overall housing shortage in the U.S. As the nation’s largest homebuilder, the company is poised to help meet the pent-up demand.
Should you invest $1,000 in D.r. Horton right now?
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Speights has positions in Amazon, Bank of America, and Berkshire Hathaway. The Motley Fool has positions in and recommends Amazon, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy.