I've said many times before that if I could only own one stock, it would be Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). In short, investing in Berkshire is like buying a diversified investment portfolio selected by some of the best minds in the industry.
Recently, Berkshire became the first stock outside the technology sector to reach a $1 trillion valuation, and many investors think it might be too expensive to buy right now. But I'm not so sure.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »
As of this writing, Berkshire has a $1.014 trillion market cap, and its stock portfolio has a value of about $301 billion. If we subtract that, and the $325 billion in cash Berkshire reported on its balance sheet at the end of the third quarter, we see the market is valuing Berkshire's businesses at about $388 billion. This is about 12.5 times trailing-12-month operating earnings, a lower valuation than most stocks on my radar.
The biggest reason to buy Berkshire
While the valuation is certainly a good reason why it isn't too late to buy Berkshire, the most compelling reason I'd still buy the stock right now is that $325 billion cash stockpile. And keep in mind that this was as of the end of September 2024. It has most likely increased even further by now.
This situation gives Berkshire tremendous financial flexibility. For the time being, Berkshire's cash is invested in short-term Treasuries and while interest rates vary over time, the cash is earning somewhere in the neighborhood of $12 billion annually for the company in interest income. But it could also be used if a recession or market crash hits to take advantage of opportunities, or to make a major acquisition if something attractive came along.
With so much economic uncertainty in the United States right now, Berkshire's financial flexibility could become a tremendous asset if the stock market becomes volatile.
Should you invest $1,000 in Berkshire Hathaway right now?
Before you buy stock in Berkshire Hathaway, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $850,946!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of February 7, 2025
Matt Frankel has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends 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.
