In this piece, we will take a look at the 12 best value stocks to buy according to Warren Buffett. If you want to skip our overview of Mr. Buffet and how value investing is an integral part of his financial journey then take a look at 5 Best Value Stocks To Buy According To Warren Buffett.
For most people, investing often appears to be a black box. This was even truer before the current computing era that has placed copious amounts of financial and non financial information at everyone’s fingertips. Buying a stock came with a variety of risks, and to mitigate these, a deeper understanding of the fundamentals was needed to avoid hefty losses. After all, there is no stop gap to a share price which can rapidly drop and erase all principal in the blink of an eye.
Yet, the finance industry is among the few that can truly transform an individual from rags to riches. The American Dream, for most parts, revolves around a stable source of income and a house – and as alluring and indispensable as this is, it is unlikely to make most people into overnight millionaires. With the financial sector, a couple of bets can transform anyone’s life in ways previously thought unimaginable.
One of the biggest ways through which anyone can profit from the stock market is through share price appreciation. Just like there is no downward stop gap to how low stock can go, there’s no upper bar, either. For instance, consider two stocks that everyone knows, Meta Platforms, Inc. (NASDAQ:META) and NVIDIA Corporation (NASDAQ:NVDA). Meta’s shares have more than doubled this year, as they opened 2023 at $124 and are now currently trading at $341. For the average retail investor with a total savings of $2,000, even if half of these had been invested into Meta at the start of 2023, it would have doubled for a generous return. For the more established folks, investing $10,000 in the shares would definitely have made investing worth its while. Similarly, NVIDIA’s shares have more than tripled this year, so our hypothetical retail investor could have made more money than their savings by simply investing half of the savings in a single stock.
At the heart of making money through share price appreciation is an approach called value investing. For the uninitiated, it involves determining the fair value of a stock and then checking the market price to see whether it’s lower or higher. If the market price is lower, then a buying decision is made based on a metric called the margin of safety. Since a value investing decision bases its buying decision on the assumption that the market value will match the fair value at some point in the future, the lower the market price, the higher the margin of safety is.
Warren Buffett is one of the strictest adherents of value investing, as is evident by his firm’s investment portfolio. When compared to most of the hotshot hedge funds in the market, Berkshire Hathaway buys shares and then forgets about them – most of the time. Its most successful stock picks have delivered spectacular returns simply through long term share price appreciation. For instance, we took a look at Warren Buffett’s 12 Longest Held Stocks and discovered that his three longest held shares are those of Express Company (NYSE:AXP), The Coca-Cola Company (NYSE:KO), and Moody’s Corporation (NYSE:MCO), and his first major purchases were more than two decades back – or when most of Gen Z wasn’t born. Now, Berkshire’s investment portfolio is worth $313 billion and Mr. Buffett is a centi-billionaire, in a simple and effective demonstration of the potential of value investing.
Today, we’ll look at some of Warren Buffett’s top value stock picks and some notable names are T-Mobile US, Inc. (NASDAQ:TMUS), Bank of America Corporation (NYSE:BAC), and Citigroup Inc. (NYSE:C).
Our Methodology
To compile our list of Warren Buffett’s best value stocks, we first ranked his firm’s latest stock picks by their price to trailing earnings ratio. Then, the top 20 with the lowest P/E ratios were ranked by the number of hedge fund investors that had bought them as of Q3 2023 out of which the top stocks were chosen as the best value stocks that Warren Buffett is buying.
Best Value Stocks To Buy According To Warren Buffett
12. HP Inc. (NYSE:HPQ)
Berkshire Hathaway’s Q3 2023 Investment Value: $2.6 billion
Latest P/E Ratio: 12.3
Number of Q3 2023 Hedge Fund Investors: 44
HP Inc. (NYSE:HPQ) is the personal computing business division of HP, one of Silicon Valley’s oldest technology companies. Its shares dropped in late November after the firm’s third quarter earnings report outlined that personal computing sales dropped during the quarter.
By the end of September 2023, 44 out of the 910 hedge funds profiled by Insider Monkey had held a stake in HP Inc. (NYSE:HPQ). Warren Buffett’s Berkshire Hathaway owns the biggest stake among these which is worth $2.6 billion.
Along with Bank of America Corporation (NYSE:BAC), T-Mobile US, Inc. (NASDAQ:TMUS), and Citigroup Inc. (NYSE:C), HP Inc. (NYSE:HPQ) is a value stock that Warren Buffett and hedge funds are piling into.
11. The Liberty SiriusXM Group (NASDAQ:LSXMA)
Berkshire Hathaway’s Q3 2023 Investment Value: $1.1 billion
Latest P/E Ratio: 10.29
Number of Q3 2023 Hedge Fund Investors: 48
The Liberty SiriusXM Group (NASDAQ:LSXMA) is a media and entertainment company that operates radio stations and podcasts. Its shares are rated Strong Buy on average and analysts have set an average share price target of $36.21.
As of Q3 2023 end, 48 out of the 910 hedge funds polled by Insider Monkey were the firm’s investors. The Liberty SiriusXM Group (NASDAQ:LSXMA) ‘s largest investor in our database is Warren Buffett’s Berkshire Hathaway as it owns $1.1 billion worth of shares.
10. Capital One Financial Corporation (NYSE:COF)
Berkshire Hathaway’s Q3 2023 Investment Value: $1.2 billion
Latest P/E Ratio: 8
Number of Q3 2023 Hedge Fund Investors: 49
Capital One Financial Corporation (NYSE:COF) is a banking, loan, and credit services provider. The firm is facing a lot of heat from customers these days, who allege in a lawsuit that it misled them about the interest rate for savings accounts which led to significantly lower interest payouts than would be possible.
During this year’s third quarter, 49 out of the 910 hedge funds profiled by Insider Monkey had bought and owned Capital One Financial Corporation (NYSE:COF)’s shares. Natixis Global Asset Management’s Harris Associates was the firm’s biggest shareholder due to its $1.8 billion stake.
9. Lennar Corporation (NYSE:LEN)
Berkshire Hathaway’s Q3 2023 Investment Value: $1.5 million
Latest P/E Ratio: 9.45
Number of Q3 2023 Hedge Fund Investors: 63
Lennar Corporation (NYSE:LEN) is a home building company that is one of the largest of its kind in the U.S. 2023 has been a tumultuous year for the company, as while it performed well during the first year due to margins accumulated during the COVID era, right now high mortgages are taking a bite out of home demand.
Insider Monkey scoured through 910 hedge funds for their September quarter of 2023 shareholdings and found that 63 were the firm’s shareholders. Lennar Corporation (NYSE:LEN)’s largest investor among these is Edgar Wachenheim’s Greenhaven Associates through its $1 billion investment.
8. D.R. Horton, Inc. (NYSE:DHI)
Berkshire Hathaway’s Q3 2023 Investment Value: $641 million
Latest P/E Ratio: 9.19
Number of Q3 2023 Hedge Fund Investors: 64
D.R. Horton, Inc. (NYSE:DHI) is another home building company and one that serves the needs of more than a hundred markets. The firm has done well on the financial front as of late since it has beaten analyst EPS estimates in all four of its latest quarters.
By the end of this year’s third quarter, 64 out of the 910 hedge funds surveyed by Insider Monkey had invested in D.R. Horton, Inc. (NYSE:DHI). Warren Buffett’s Berkshire Hathaway owned the biggest stake among these which was worth $641 million and came via 5.9 million shares.
7. Chevron Corporation (NYSE:CVX)
Berkshire Hathaway’s Q3 2023 Investment Value: $18.5 billion
Latest P/E Ratio: 10.71
Number of Q3 2023 Hedge Fund Investors: 72
Chevron Corporation (NYSE:CVX) is a petro giant with a global production base. The firm was in a bit of trouble in Australia in November 2023 after an LNG production line shut down. However, Chevron Corporation (NYSE:CVX) resolved the problem which it claimed was due to an electrical failure.
During this 2023’s September quarter, 72 out of the 910 hedge funds part of Insider Monkey’s database were the firm’s shareholders. Chevron Corporation (NYSE:CVX)’s largest investor is Warren Buffett’s Berkshire Hathaway due to its $18.5 billion stake.
6. Charter Communications, Inc. (NASDAQ:CHTR)
Berkshire Hathaway’s Q3 2023 Investment Value: $1.6 billion
Latest P/E Ratio: 13.23
Number of Q3 2023 Hedge Fund Investors: 73
Charter Communications, Inc. (NASDAQ:CHTR) is a broadband and communications company headquartered in Stamford, Connecticut. Its shares are rated Buy on average and analysts have set an average share price target of $471.
73 out of the 910 hedge funds profiled by Insider Monkey had bought Charter Communications, Inc. (NASDAQ:CHTR)’s shares in Q3 2023. Along with T-Mobile US, Inc. (NASDAQ:TMUS), Bank of America Corporation (NYSE:BAC), and Citigroup Inc. (NYSE:C), it is a Warren Buffett value stock to buy according to hedge funds.
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Disclosure: None. 12 Best Value Stocks To Buy According To Warren Buffett is originally published on Insider Monkey.
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