Investing

Wall Street Thinks This Warren Buffett Stock Pick Has 27% Upside

Trey Thoelcke

Published: May 9, 2024 9:15 am

When Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-A) part with shares of Apple Inc. (NASDAQ: AAPL), the largest stake in the Berkshire portfolio, it makes headlines. Of course it does. The so-called Oracle of Omaha is probably the best-known investor in the world, certainly one of the most successful. Millions of investors and aspiring investors still hang on his every word. So, is it time to dump Apple then? Not so fast. Buffett affirmed at the recent annual shareholder meeting that he’s still a big proponent of Apple and does not expect the stock to cease being the top holding in the Berkshire portfolio anytime soon. The trim was apparently in anticipation of coming tax changes, according to Inc.

However, Wall Street analysts are not particularly optimistic about Apple, at least in the short term. Their consensus price target suggests there is less than 3% upside potential in the next 12 months. One Buffett stock pick they do have higher hopes for is Sirius XM Holdings Inc. (NASDAQ: SIRI). There they see more than 27% potential upside.

Sirius XM and More

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Berkshire had over 40 million shares of Sirius XM on last look, though that is well less than 1% of the portfolio. Where Buffett has chosen to focus lately, though, is on the tracking stocks involved with the pending merger between Sirius XM and Liberty Media. Since the beginning of the year, Buffett has acquired more than 13.4 million shares of Liberty Sirius XM Group Class A (NASDAQ: LSXMA) and over 24.6 million of Liberty Sirius XM Group Class C (NASDAQ: LSXMK). Those stakes are up to almost 35.2 million and about 70.0 million shares, respectively.

Analysts anticipate even more upside from these tracking stocks. Reaching their mean price targets would be a gain of 50.2% for the A shares and 56.0% for the C shares. Furthermore, below is a look at analysts’ upside expectations for other stocks related to Liberty Media (all are or have been Buffett stocks) in the next 12 months.

Sirius XM stock is down more than 41% year to date, despite popping almost 9% in the past week after hitting a multiyear low of $2.92 per share. And despite a couple of recent upgrades, analysts remain cautious; just eight out of 18 who cover the stock recommend buying shares. They do come with a 3.3% dividend, though.

Liberty Sirius XM shares of both classes have risen in the past week as well. They are both more than 10% lower than at the beginning of the year, however. The consensus analyst recommendation for both classes of the stock is to buy shares.

Is Warren Buffett Still Relevant?

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Forbes asked in 2019 whether Buffett was still relevant. The answer was yes, for his vision, his resilience, and his principles. Despite the current market and economic uncertainty, little about Buffett and his style of investing has changed since then, as he approaches 94 years of age. He built his wealth by value investing. That is, by buying into businesses with a solid foundation but with stocks that trade for less than their intrinsic value. It is a strategy that made Berkshire Hathaway into a conglomerate with a current market cap near $875 billion and made Buffett one of the wealthiest persons in the world. No wonder his words and actions still make headlines.

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