When the world’s greatest investor makes a move, traders want to follow the lead to see which Warren Buffett stocks to buy and position their own portfolios for success.
On Wednesday, May 15, Warren Buffett disclosed Berkshire Hathaway’s (NYSE:BRK-A, NYSE:BRK-B) latest portfolio update for Q1 2024. Sales exceeded purchases for the eighth consecutive quarter, indicating a lack of potential investments that meet his criteria. The Warren Buffett portfolio now consists of 41 stocks worth over $331 billion, slightly decreasing from $352 billion in the previous quarter. This may be the case due to increased cash reserves now amounting to a record $190 billion.
The Oracle of Omaha shook things up a little by selling his entire stake in Paramount Global (NASDAQ:PARA) and HP (NYSE:HPQ) and trimming 3% of his Apple (NASDSQ:AAPL) stake. Though Apple stock still represents his biggest stake just shy of 40% of Berkshire’s market cap. He also sold smaller amounts of shares of Chevron (NYSE:CVX), Louisiana-Pacific (NYSE:LPX), and Sirius XM Holdings (NASDAQ:SIRI).
However, the Berkshire Hathaway portfolio witnessed notable stakes in several other stocks, indicating the Oracle’s bullishness on those companies. Three must-have Warren Buffett stocks to buy in particular demonstrate his savvy:
Chubb (CB)
One of the long-awaited hidden Warren Buffett stocks to buy was revealed to be Chubb (NYSE:CB), the world’s largest publicly traded property and casualty insurance company. With a strong global brand and underwriting discipline, Chubb has a diversified portfolio of commercial, personal insurance, and reinsurance products worldwide.
As the insurance sector tends to perform well during times of economic uncertainty, Chubb stock is an attractive defensive investment. With a global presence and suite of products, Buffett likely sees numerous opportunities for the company to expand its customer base further and boost premiums.
In Q1 2024, Buffett’s Berkshire Hathaway invested over $6.7 billion in Chubb stock, which subsequently saw its share price jump over 8% to a record high. Buffett increased his stake in Chubb stock by 28.97%, buying over 5.8 million additional shares.
The company maintains a solid balance sheet, consistently generates strong cash flow, and has raised its dividend for over 25 consecutive years. Recent acquisitions of Cigna’s (NYSE:CI) life and disability insurance arm and pet insurance provider Healthy Paws also open up new avenues for growth and long-term value.
Liberty Media Siriusxm Sr C (LSXMA)
Buffett also added 62.03% and 51.56% to his holdings in Liberty SiriusXM Series A (NASDAQ:LSXMA) and Liberty SiriusXM Series C (NASDAQ:LSXMK) shares, respectively. As the largest shareholder of Sirius XM Holdings, he continues to show faith in this low-risk, high-reward satellite radio company providing stable, recurring revenue.
Beyond Sirius XM, the company holds stakes in Live Nation (NYSE:LYV) and Liberty Formula One Group (NASDAQ:FWONK). Buffett probably believes the sum of the parts is undervalued. LSXMA’s price-to-earnings (P/E) ratio trades at 10x compared to the industry median of 19x.
The group recently reported its Q1 earnings. Revenue was up 1% year-over-year (YOY) and operating income 10%. Notably, Formula One revenue surged 54% and operating income 494%. The valuation of LYV’s stake also increased to $7.366 billion from $6.519 billion at the end of 2023, reflecting strong demand for live entertainment.
Despite missing EPS, LSXMA is one of the solid Warren Buffett stocks to buy. Growth estimates for the current quarter show an increase of 232%. The company’s free cash flow yield is 11x better than the industry average of 1.25%.
Bank of America (BAC)
Bank of America (NYSE:BAC) remains firmly in Buffett’s portfolio as one of his oldest stakes, currently around 10% of his entire portfolio valued at around $40 billion. Buffett first invested $5 billion in BAC during the 2011 debt crisis and has held the stock ever since. His stake has remained largely unchanged over the years, proving his long-term confidence in BAC stock.
The bank holds the second-largest asset position in the U.S. It has over 66 million customers, many of whom have been clients for decades, providing a steady source of revenue and opportunities. In Q1 2024, BAC increased its provisions for credit losses by around 40% to $1.3 billion.
BAC has a strong capital position and has benefited from high interest rates. Buffett may believe that the banking sector will continue to grow steadily over time and likely benefit from the higher-for-longer narrative and an expanding U.S. economy. Sell-side analysts set a price target for the next 12 months, suggesting a 17% upside.
On the date of publication, Stavros Tousios did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
