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Warren Buffett has made my life difficult. I originally wanted to write this article, but DR Horton.But Mr. Buffett (or one of his two lieutenants) decided to back out completely. berkshire hathawayQ4 2023 position in home construction companies.
The good news is that Buffett still owns a significant number of blue-chip stocks. The bad news is that choosing which one is best isn’t easy. But after much deliberation, I made my choice. Here are my favorite Buffett stocks to buy right now.
several strong candidates
I like and own several of the stocks in Buffett’s Berkshire Hathaway portfolio. Many are solid buying options for investors.
for example, Amazonprofitability continues to improve significantly. Generative AI is a big tailwind for the company. The company’s advertising business is growing by leaps and bounds.
Not surprisingly, Buffett holds positions in some attractively valued stocks. In particular, Japanese trading companies Sumitomo, stand out.that’s right american bankthe expected earnings multiple is 10.6x.
I think Buffett’s big bet on energy stocks could pay off. especially, western oil is intrigued by the large-scale investment in direct air capture, a technology that literally sucks carbon dioxide out of the atmosphere.
master Card Like other payment processing stocks owned by Buffett, this one is a great pick. And we could go on and on about even more great stocks to buy, including Berkshire Hathaway itself.
backup plan
However, as I thought about my decision, I realized that even though I had sold all of my Berkshire DR Horton shares, Buffett had left me with a “Plan B.” Actually, he also left me a “Plan C”.Berkshire’s portfolio still includes: lenner (NYSE:Ren) and NVR (NYSE:NVR).
The main reasons I like DR Horton also apply to Lennar and NVR. They are all home builders. Therefore, every company should benefit from his two key elements.
First, the United States continues to face a severe housing shortage. Moody’s Analytics recently estimated that as many as 2 million more homes are needed nationwide. It could take years to build enough housing to restore market balance.
Second, interest rates are almost certainly on the way. Despite January’s better-than-expected inflation report, many economists still expect the Fed to start cutting rates in May or June. Every rate cut should be a tailwind for home builders.
My favorite Buffett stocks to buy right now
So which Buffett stock of the two remaining homebuilders in Berkshire’s portfolio should I buy right now? I’m going with Lennar.
Valuation was an important consideration for me. Lennar’s stock trades at a forward price-to-earnings ratio of 10.8 times, significantly lower than NVR’s forward price-to-earnings ratio of nearly 16 times.
We also like that Lennar’s board is taking more proactive steps to reward shareholders. NVR recently announced a $750 million stock repurchase program, while Lennar has expanded its stock repurchase to a staggering $5 billion. The company also increased its annual dividend from $1.50 per share to $2 per share.
It may not be long before Mr. Renner becomes a Buffett stock pick. As of the end of 2023, Berkshire’s total stake in homebuilders was approximately $21.7 million. This is pocket change for large conglomerates. With Berkshire relinquishing its position at DR Horton, Lennar (and possibly NVR as well) could be next on the chopping block. However, given Lennar’s long-term growth prospects, near-term catalytic potential, and attractive valuation, I think it’s a great stock to buy rather than sell right now.
Should you invest $1,000 in Lennar now?
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Bank of America is an advertising partner of The Motley Fool’s Ascent. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Keith Speights has held positions at Amazon, Bank of America, Berkshire Hathaway, and Mastercard. The Motley Fool has positions in and recommends Amazon, Bank of America, Berkshire Hathaway, Lennar, Mastercard, and NVR. The Motley Fool recommends Occidental Petroleum and recommends the following options: A long January 2025 $370 call on Mastercard and a short January 2025 $380 call on Mastercard. The Motley Fool has a disclosure policy.
My Favorite Warren Buffett Stocks to Buy Right Now was originally published by The Motley Fool
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