Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) owns a stock portfolio worth roughly $300 billion with about four dozen individual stocks in it. Legendary stock-picker Warren Buffett himself hand-selected many of them, especially the larger positions.
To be fair, there's a solid bull case to be made for most of the stocks in Berkshire's portfolio. They are generally companies that are among the leaders in their industries and have steady cash flow, and there's usually an identifiable competitive advantage, or several, which is a big cornerstone of Buffett's investing style.
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Still, at any given time, there are some Buffett stocks that look more attractive than others. Here are five in particular that look like excellent buys as we head into 2025.
My top 5 Warren Buffett stocks to buy right now
- Bank of America (NYSE: BAC): Buffett's largest bank stock investment has a lot to gain as interest rates come down. Its deposit cost, currently a little over 2%, should gradually come down and its net interest margin should rise. Plus, Bank of America could be a big beneficiary of the looser regulation that is expected to develop under the incoming Trump administration, as well as potentially lower corporate taxes.
- Ally Financial (NYSE: ALLY): Ally is primarily an auto lender, and its stock has been beaten down recently thanks to a higher-than-expected rise in chargeoffs in the third quarter. However, at a 12% discount to book value, Ally could make a lot of sense from a risk-reward standpoint. Its average new auto loan yields 10.5%, and as its deposit cost gradually comes down, management sees room to add nearly 80 basis points to the net interest margin in the medium term.
- Amazon.com (NASDAQ: AMZN): Not only has Amazon's business been growing impressively on both the e-commerce and cloud services sides of the company, but it has also become far more profitable over the past couple of years under CEO Andy Jassy's leadership. With e-commerce representing only about 16% of U.S. retail sales and a cloud computing market that is expected to roughly triple in size by 2032, there could be tons of room to grow.
- Sirius XM Holdings (NASDAQ: SIRI): One of the few stocks Buffett and his team have been buying recently, Sirius XM looks like an interesting opportunity right now. Berkshire now owns about 35% of the satellite radio company, which essentially has a monopoly in its industry. Most of Sirius' revenue comes from recurring subscription payments, and the company trades for a single-digit multiple of expected 2025 earnings.
- Berkshire Hathaway: Last, but certainly not least, there's a solid argument to be made that the best Warren Buffett stock to buy right now is Berkshire Hathaway itself. For one thing, when backing out the value of the company's stock portfolio and cash position, Berkshire's collection of high-quality operating businesses are trading for about 13 times trailing-12-month operating earnings. And the cash position, which currently sits at about $325 billion, gives Berkshire unmatched financial flexibility to pursue attractive investment opportunities, especially if the economy weakens.
How should you allocate $1,000?
If you have $1,000 to allocate, you could simply invest $200 each into all five of these stocks, or you could choose to divide your money among the two or three you're most excited about. And of course, I can't think of a good argument against investing the entire $1,000 in Berkshire Hathaway itself. But the key takeaway is that these are five excellent long-term investments that could help you put $1,000 to work right now.
Don’t miss this second chance at a potentially lucrative opportunity
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*Stock Advisor returns as of December 30, 2024
Ally is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Matt Frankel has positions in Ally Financial, 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
