Investing

The 10 Best Warren Buffett Stocks to Buy in the Berkshire Hathaway Portfolio

Dollar General Corp. (NYSE: DG) is a former holding but one that investors might want to keep paying attention to whether or not Buffett’s portfolio managers sold out. It has seen a bit of a stall in its appreciation wave, but if the consumer demographics are changing for the worst in America, then Dollar General likely will be the beneficiary. With shares at $52.47, the consensus price target of $58.29 implies upside of 11%. There is no dividend here, and the 52-week trading range is $39.73 to $55.82.

General Motors Co. (NYSE: GM), aka Government Motors, has a lot of room to run up if the analyst community is correct. The car maker is enjoying a climate in which the U.S. public’s car fleet is so old that old cars almost have to be replaced with new ones. At $34.38, the consensus price target of $44.73 implies an upside of a whopping 30%. GM has traded in a 52-week range of $20.86 to $37.71. GM pays no dividend and likely will not until its stakes are dealt with. GM’s position was raised to 40 million shares, worth some $1.37 billion in today’s prices, but this is still small compared to a $47 billion market cap for the whole company.

International Business Machines Corp. (NYSE: IBM) is interesting to see on the list of Buffett upside stocks. It seems that the sell-off is the reason that this one appears to be cheap. We have been critical of its pursuit of $20 in earnings per share at all costs, since the stock was above $200. Now at $185.34, the consensus price target of $217.80 brings implied upside of 17.5%. IBM is basically at a year low now, as its 52-week trading range is $184.78 to $215.90. The DJIA component has a dividend yield of 2.1%, now that shares have sold off this much. IBM’s position of 68.1 million shares would be worth some $12.6 billion, and that is lower than before now that shares have slid.

National Oilwell Varco Inc. (NYSE: NOV) is still relatively new as a holding for Team Buffett. The oil rig platform maker and heavy equipment maker traded as $72.73, against a 52-week range of $63.08 to $89.95. The consensus price target of $83.15 is not even a 52-week high and implies upside of about 14.3%. National Oilwell Varco has a dividend yield of 1.4%. The NOV position was grown to 8.88 million shares, worth almost $650 million in today’s prices. While this stake has been raised twice by one of the new portfolio managers, this is still small as a percentage because the market cap is $31 billion.

Precision Castparts Corp. (NYSE: PCP) manufactures metal components and products and caters to many industries, and frankly is a manufacturing outfit that Buffett probably would love to own outright if the chance ever came up. Shares trade at $216.94, and the consensus price target of $255.33 generates an implied upside of about 17.7%. The dividend here is almost too small to even mention at 0.1%, and shares have traded in a 52-week range of $157.51 to $254.14. The company was the same stake of roughly 2 million shares, worth almost $434 million today versus a market cap of $31.5 billion.

Phillips 66 (NYSE: PSX) remains a holdover position from the Conoco spin-off. Its share price of $56.30 comes with a consensus price target of $70.85, implying upside of almost 26%. Phillips 66 pays a dividend of 2.2%, and its 52-week range is $40.42 to $70.52. The stake was the same 27.16 million shares as previously shown, worth some $1.53 billion today. Its market cap is more than $34 billion.

USG Corp. (NYSE: USG) is a very long-term holding of Berkshire Hathaway and is in the home-building products industry. At $24.34, there is an implied upside of 23.5%, if the consensus analyst price target of $30.50 is seen again. USG pays no dividend, but the consensus target seems reasonable when you consider that the 52-week range is $18.59 to $30.97. The USG stake is $413 million now, but this is believed still to be much higher if you include debt or convertible debt.

Visa Inc. (NYSE: V) finally has seen its shares pull back after what feels like years and years of running. The credit card processing giant trades at $173.13, against a 52-week range of $125.81 to $196.00. Its consensus price target of $208.09 implies upside of about 20.2%. The dividend yield here is only 0.8%. Buffett’s Visa stake, likely taken by one of the newer portfolio managers, is worth some $268 million today. That is rather small and of little influence over the company with a market cap of more than $100 billion.

Suncor Energy Inc. (NYSE: SU) was not included in these “top ten” because technically it is not a U.S. company. That being said, its $34.00 share price compares to a consensus price target of $42.01 and implies an upside of almost 23%. Be advised, we also believe that Buffett is signaling a favorable trend for Canadian oil sands. His stake was close to $600 million in current terms.

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