Investing in Top Warren Buffet Shares with a Thousand Dollars at the Moment
Berkshire Hathaway ((BRK.A) 0.12%, (BRK.B) 0.12%) boasts a stock portfolio worth roughly $300 billion, comprising around 4 dozen individual stocks. Legendary investor Warren Buffett personally selected many of these, with larger positions being his specialty.
To a certain extent, there's a persuasive bull argument for most stocks in Berkshire's portfolio. These are usually businesses leading their respective industries, with a consistent cash flow, and showcasing a competitive edge, which is fundamental to Buffett's investment strategy.
However, at any given point, some Buffett-picked stocks may appear more appealing than others. Here are five that seem particularly promising, heading into 2025:
My top 5 Buffett stocks worth investing in
- Bank of America ((BAC) 0.41%): Buffett's primary bank stock investment could prosper, given the projected decline in interest rates. Its current deposit cost (slightly above 2%) should decrease, while its net interest margin should increase. Moreover, Bank of America might gain from the anticipated deregulation under the new Trump administration and potential corporate tax reductions.
- Ally Financial ((ALLY) 1.32%): Ally is primarily an auto lender, and its stock has been adversely affected lately due to a more significant-than-anticipated rise in chargeoffs during the third quarter. However, given its 12% discount relative to the book value, Ally looks appealing from a risk-to-reward perspective. Its average new car loan yields 10.5%, and with a reduction in deposit costs, Ally's management envisions the capacity to augment the net interest margin by approximately 80 basis points in the mid-term.
- Amazon.com ((AMZN) 0.10%): Amazon's business has experienced impressive growth in both the e-commerce and cloud services sectors. The company has also become significantly more profitable under the leadership of CEO Andy Jassy. With e-commerce accounting for only approximately 16% of U.S. retail sales and a projected cloud computing market that could triple in size by 2032, abundant growth potential exists.
- Sirius XM Holdings ((SIRI) 0.09%): One of the few stocks Berkshire has been purchasing recently, Sirius XM seems like an attractive investment opportunity. Berkshire now owns around 35% of the satellite radio company, which enjoys a near-monopoly in its sector. Most of Sirius' revenue stems from recurring subscription payments, and the company trades at a relatively low multiple compared to expected 2025 earnings.
- Berkshire Hathaway: Lastly, a convincing argument could be made that the best Buffett stock to invest in right now is Berkshire Hathaway itself. By excluding the value of the company's stock portfolio and cash reserves, Berkshire's collection of high-quality operating businesses are trading at around 13 times their trailing 12-month operating earnings. Additionally, the substantial cash reserve (approximately $325 billion) affords Berkshire unparalleled financial flexibility to pursue attractive investment opportunities, particularly during economic downturns.
How to invest $1,000
If you have $1,000 to invest, you could distribute $200 to each of these five stocks, or focus on two or three selections you find most appealing. Alternatively, committing the entire $1,000 to Berkshire Hathaway itself is an option. Nevertheless, the primary premise is that these five stocks represent excellent long-term investment prospects, offering opportunities to put $1,000 to work.
Based on Berkshire Hathaway's investment strategy, these stocks are likely to perform well due to their strong cash flow, industry leadership, and competitive edge. Buffett himself has invested significantly in Bank of America and Sirius XM.
Investors considering a smaller investment of $1,000 might consider spreading their funds across several of these high-potential stocks, including Bank of America, Ally Financial, Amazon.com, Sirius XM Holdings, and even Berkshire Hathaway itself, which offers financial flexibility due to its substantial cash reserves.
