Warren Buffett, often hailed as the Oracle of Omaha, boasts an unparalleled track record of making legendary stock picks that have stood the test of time. His investment skills and philosophy have turned Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B,) into a titan in the space with a portfolio that many investors eagerly study for insights. His consistent ability to identify undervalued stocks and generate substantial returns has rightfully made him a beacon of wisdom in the financial world.
However, I don’t believe every one of the 39 stocks in Berkshire’s portfolio is a great buy now. In fact, after the recent, rather extended rally, some names appear to have become overvalued. That said, some Warren Buffett stocks still offer attractive opportunities right now. At least a few stocks in his portfolio trade at fair valuations while still benefiting from the endorsement of being part of Buffett’s carefully curated selection.
In this article, I will highlight three Warren Buffett stocks that stand out as excellent buys in July. Their current market positions, combined with the legendary investor’s seal of approval, make them strong candidates for investors looking to add robust, value-driven names to their portfolios.
Visa (V)
In my view, the most obvious Warren Buffett stock that stands out as a compelling buying opportunity is Visa (NYSE:V). Alongside Mastercard (NYSE:MA), Visa has established a near-duopoly in the payments processing market. Most of us carry at least a couple of cards from each network in our physical and digital wallets.
Visa’s incredible competitive advantage, combined with the societal shift towards cashless transactions, has allowed it to grow rapidly and boast phenomenal profit margins. In the last decade, its revenues and earnings-per-share (EPS) have grown at a compound annual growth rate of 10.7% and 15.9%, respectively.
Visa has been a member of Berkshire Hathaway’s portfolio since Q3 of 2011, a testament to Buffett’s confidence in its long-term potential. Since then, Visa has delivered huge returns. The company’s one-of-a-kind moat and the natural tailwinds it enjoys continue to fuel its bullish case. This is particularly true today, with Visa trading at a rather attractive forward P/E of 25.5 while retaining double-digit top and bottom-line growth prospects.
Kraft Heinz Company (KHC)
Next up, we have The Kraft Heinz Company (NASDAQ:KHC). The global food and beverage powerhouse is known for its iconic brands such as Kraft, Heinz, Oscar Mayer and Planters. These household names have cemented the company’s presence in kitchens worldwide, offering a wide range of products from condiments and sauces to cheese and snacks.
Warren Buffett’s Berkshire Hathaway has a significant history with Kraft Heinz. In 2015, the Omaha-based conglomerate became a principal shareholder when Heinz merged with Kraft Foods. Today, the Omaha-based conglomerate owns about 26.8% of Kraft Heinz’s stock, underscoring Buffett’s belief in the company’s enduring value.
Admittedly, Kraft Heinz’s stock has faced challenges and hasn’t shown substantial price movement for some time. Nevertheless, the company continues to pay a hefty dividend, currently yielding around 5%. Further, the recent decline in Kraft Heinz’s stock price has made it relatively cheap, presenting a potentially attractive buying opportunity for value-oriented investors. At a forward P/E of just 10.5, KHC stock trades at historically low levels, providing both a margin of safety and strong upside potential.
Charter Communications (CHTR)
The last of the Warren Buffett stocks that look like a solid buy now is Charter Communications (NASDAQ:CHTR). The telecom giant is the second-largest cable operator in the U.S., serving over 32 million residential and business customers. Berkshire Hathaway has recognized its potential, holding a stake in Charter since 2014. The fact that Warren Buffett has stayed invested in the company for over a decade certainly signals confidence regarding its overall quality growth prospects.
Charter enjoys considerable competitive advantages, including owning a massive network infrastructure, advanced broadband technology and a diversified service portfolio. Also, telecommunications are essential for both households and businesses, allowing Charter to maintain strong and predictable cash flows. This resilience is supported by consistent subscriber growth and exceptional customer retention rates.
Despite facing challenges from its substantial debt load — currently at nearly $98 billion — Charter has adapted by suspending new debt issuances and turning its focus towards deleveraging. Further, the company continues to execute aggressive share buybacks, leveraging its stock’s cheap valuation to create shareholder value. Now trading at a historically low forward P/E of just 9.4X, Charter looks like one of the cheapest stocks boasting Warren Buffett’s seal of approval right now.
On the date of publication, Nikolaos Sismanis did not hold (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
