The 5 Best Performing Warren Buffett Stocks of 2016 — With IBM and Wal-Mart?

July 7, 2016 by Jon C. Ogg

store-front-night
Source: courtesy of Wal-Mart Stores Inc.
Warren Buffett is currently among the world’s most closely followed investment gurus. As he was the world’s richest man on paper, it seems pretty certain he must know a few things about high finance. Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-A) now own close to $130 billion in common and preferred stock of U.S. public companies.

It has been an unusual year for stocks. The market is currently in positive territory despite all the woes. Europe and Japan are deep into quantitative easing as the Brexit fears get going. And a really ugly start to the year found the same reception as all other sell-offs in the past five years or so — investors just bought stocks in droves.

As of Wednesday, July 6, the Dow Jones Industrial Average was up 3.7% and the S&P 500 was up 3.3% so far in 2016. Berkshire Hathaway itself was up 7.6% year to date in the A-shares.

Investors often love watching the top stocks and the new additions and deletions from Buffett’s top stock holdings each quarter. 24/7 Wall St. just featured the five worst Buffett stocks of 2016, and here are the five best performing Buffett stocks so far in 2016. They are handily outperforming the broader market. Brief color and commentary has been added on each position.

It will be interesting to see if these stocks will hold their gains in the rest of 2016. As you will see, most are at or above their consensus analyst price targets from Wall Street analysts.

Charter Communications

A much larger company than when Team Buffett first invested, Charter Communications Inc. (NASDAQ: CHTR) is also insulated from almost all of the ongoing international woes. Its shares were last seen up a whopping 27% so far in 2016, and up an even higher 33% than a year ago. That is all without it even paying a dividend, as well as with it having more debt than traditional Buffett stocks. Berkshire Hathaway’s portfolio managers have even been raising their stake here, up to 10.32 million shares from 8.5 million earlier in 2015.

At $232.78 as of the most recent close, Buffett’s stake is worth almost $2.4 billion, versus a market cap of almost $63 billion. The stock has a 52-week trading range of $156.13 to $234.47.

Verizon

Verizon Communications Inc. (NYSE: VZ) was last seen up a sharp 25% so far in 2016, and it was also up 26% from a year ago. This outsized performance is from investors chasing yields in telecom, and Verizon is now deemed a defensive play with limited exposure in markets where the world is scared. In some ways it is a utility stock.

Verizon shares were last trading at $56.26, and its consensus analyst price target is $52.44. Its market cap is $229 billion, and it has a 52-week range of $38.06 to $56.95.

Kraft Heinz

Last seen up a sharp 23.7% year to date, shares of the Kraft Heinz Co. (NASDAQ: KHC) also are up over 26% from a year ago. The food giant may not be as large of stake ahead if Buffett’s target of it coming down, part of his deal with 3G International, lives up to expectations. It was a 325.6 million share stake that was worth over $25 billion at the end of April.

Kraft Heinz was last seen trading at $89.74, and its consensus price target is $90.29. The market cap is $109 billion, and the stock has traded in a 52-week range of $61.42 to $89.76.

Wal-Mart

Wal-Mart Stores Inc. (NYSE: WMT) may have seen its shares return 21% so far in 2016, but the stock is up only about 4% from this time a year ago. This gain has two issues that may skew how the investing public views it now. One is that Wal-Mart is again being deemed defensive, but a second issue is that this performance is after Wal-Mart’s stock tanked in 2015 on earnings warnings. Higher labor costs and ongoing retail woes from the brick-and-mortar outfits continue.

Wal-Mart shares last closed at $73.82, above the consensus price target of $69.19. The market cap is $230 billion, and the stock price has a 52-week range of $56.30 to $74.14. Buffett’s position was a tad smaller than in prior quarters, but that was still 55 million shares, worth $4 billion or more at this time if the stake was held static.

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IBM

This one is a stock that everyone seems to hate. Still, International Business Machines Corp. (NYSE: IBM) has bounced handily off its lows, and Buffett likely feels less worried that he has over $10 billion tied up in such a poor-performing tech stock. IBM is magically up better than 12% year to date, but its stock performance is still in the red at −4.4% if compared to a year ago. Buffett likely is still underwater here, but he probably won’t sell any shares, and in fact he may buy more.

IBM was again a larger stake as Buffett himself keeps averaging his cost basis lower, with the latest stake of 81.232 million shares worth over $12 billion at the end of the first quarter. The adjusted stake now would be worth some $12.3 billion, if it was kept static.

IBM shares are back to $152.37 as of the most recent close, also above the $144.18 consensus analyst target. IBM’s market cap is $146 billion. The shares have traded hands between $116.90 and $173.78 in the past year.