Warren Buffett’s Ten Best Investments For 2011 (BRK-A, BRK-B, AXP, BAC, BK, GCI, GE, KFT, MCO, PG, UPS, WFC, WMT, SNY, GSK)

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Investors have tried for years to follow the strategy of Warren Buffett, considered by many to be the greatest investor in history. That’s ironic given how little he seems to care about ups and downs of Berkshire Hathaway Inc.’s (NYSE: BRK.A) share price and quarterly earnings.

But now that earnings season is behind us, 24/7 Wall St wanted to see which stocks currently offer the most value for investors who like to mimic Buffett’s investment strategies, which are similar to those  investors use when buying a business.  Buffett is a deep value investor whose time frame for payback is “forever.”

Ten stocks out of Buffett’s and Berkshire Hathaway’s portfolio of roughly 40 public stocks still are below their Thomson Reuters consensus price targets. In order to qualify for the lists, the Buffett positions had more than a 10% hurdle to rise before reaching the current target objective.  When we ran a similar screen of Buffett stocks earlier in the year there was a hurdle closer to 30%.  That is what happens after many rallies.

The top positions with the most upside from Buffett’s stock portfolio are American Express Company (NYSE: AXP), Bank of America Corporation (NYSE: BAC), The Bank of New York Mellon Corporation (NYSE: BK), Gannett Co., Inc. (NYSE: GCI), General Electric Co. (NYSE: GE), Kraft Foods Inc. (NYSE: KFT), Moody’s Corp. (NYSE: MCO), Procter & Gamble Co. (NYSE: PG), United Parcel Service, Inc. (NYSE: UPS), and Wells Fargo & Company (NYSE: WFC).  In order to qualify at the current time, the Buffett positions had more than a 10% hurdle to rise before reaching the current target objective.  When we ran a similar screen of Buffett stocks earlier in the year there was actually a hurdle closer to 30%.  That is what happens after many rallies.  As always, the full Buffett and Berkshire holdings are here.

In our analysis, we have included prices based as of  December 1, 2010, the consensus price targets  on each along with the upside, we added in color on what may help or hinder the implied upside, shown what each have for dividend yields, and compared each with their 52-week trading range and other older historic highs.

1) American Express Company (NYSE: AXP)  has an implied upside of about 14.5% to consensus target of $50.66.  JPMorgan just set its target at $50.00 with an overweight rating on December 1.  The current dividend yield is roughly 1.7%.  Berkshire holds $151.6 million shares.  AmEx has benefited from shrinking customer delinquencies and charge-offs.  Another strength here is that American Express tends to serve a higher-end market than many other credit companies. Its 52-week trading range is $36.60 to $49.19.

2) Bank of America Corporation (NYSE: BAC) has a  consensus target is $18.36, implying a 66% upside from its $11.04 price.  The target price is also under the near-term highs as a 52-week range is $10.91 to $19.86.  Before you get excited about it being about 1% from lows, there are some serious issues to consider.  While BofA has denied that it is ‘the big bank targeted by WikiLeaks,’ there is no way to know whether that is true.  BofA is also Public Enemy #1 when it comes to the mess in the mortgage market.  That situation may take years to solve and its outcome could be devastating for BofA shareholders.  If and when banks get to resume dividend hikes, BofA is likely to be one of the last to be able to do so.  Investors should consider that upside price target something that will come down through time as the world sits in December 2010.