Warren Buffett has been a net seller of stocks over the past twelve months. However, he still started several new positions and expanded existing positions.
The legendary investor undoubtedly thought some of his choices were better than others in retrospect. I certainly will. I’ve ranked all the stocks that Buffett has bought in the last twelve months. Before we get to the rankings, I’ll give some insight into my thoughts.
First, I ruled out Berkshire Hathaway himself, although Buffett spearheaded several major stock buybacks from his conglomerate. Second, I haven’t taken into account the performance of the stocks since Buffett bought them. Instead, I evaluated the stocks based on the total returns I expect them to deliver in the future. Third, valuation was an important consideration.
With all this in mind, here are the stocks that Buffett has bought over the last twelve months, ranked from best to worst – in my admittedly subjective opinion.
1. Chevron
Buffett has sold some shares Chevron (NYSE:CVX) in the past twelve months, but he also increased Berkshire’s stake in the oil giant in the fourth quarter of 2023. Chevron is the fifth largest position in Berkshire’s portfolio.
Why did I rank Chevron first? For starters, the dividend yield of over 4.1% gives the company a nice head start in delivering strong total returns in the coming years. The stock is relatively cheap, with a price-earnings ratio of only 12.2.
I also like Chevron’s growth prospects. The CEO of another major oil company (Spoiler alert: it’s also on the list) predicts an oil shortage by the end of 2025. Her reasoning seems correct to me, even if her timing is off. If she’s right, Chevron will be a big winner.
2. Western petroleum
Western petroleum (NYSE:OXY) Perhaps Buffett’s favorite stock these days. The Oracle of Omaha has increased Berkshire’s stake in Oxy several times over the past four quarters.
In case you haven’t guessed yet, Occidental CEO Vicki Hollub made the prediction I mentioned about a shortage of oil supplies. Her company, like Chevron, would enjoy a boost in revenue if this forecast comes true.
Buffett has high regard for Hollub and her leadership in advancing carbon capture technology. I also do that.
3. Dr. Horton
Buffett bought shares of DR Horton (NYSE: DHI) in the second quarter of 2023. He then exited Berkshire’s position in the homebuilder entirely in the fourth quarter. I’m sure Buffett had his reasons for selling, but I still think DR Horton is a great stock for long-term investors to buy.
The US continues to face a serious housing shortage. DR Horton is the country’s largest homebuilder by volume (a status it has held for more than twenty years). As such, it is well positioned to benefit from helping to tackle the housing shortage. Despite delivering exceptional gains since mid-2022, the stock’s forward profit margin is just 10.7.
4. Lennar
Lennar (NYSE: LEN) is another homebuilder that Buffett has bought in the past twelve months. However, unlike DR Horton, Berkshire still owns a small stake in this stock.
I like Lennar for the same reasons I like DR Horton, but I ranked it slightly lower because of its slightly higher earnings multiple.
5. NVR
Everything I just said about Lennar also applies NVR (NYSE:NVR). It’s Buffett’s most expensive homebuilding stock, with shares trading at nearly 15.3 times forward earnings. However, that is still not a very high rating.
6. Marubeni
Buffett expanded Berkshire’s positions in five Japanese trading houses in the second quarter of 2023. He wrote to Berkshire shareholders earlier this year that he expected to hold these shares “indefinitely.”
All five Japanese stocks offer tremendous diversification across a wide range of sectors. They are all relatively cheap. And they all pay attractive dividends. I have ranked Marubeni (OTC: MARUF) (OTC: MARUY) the highest among this group, because the price-earnings ratio of 10.9 is the lowest.
7. Mitsui
Mitsui (OTC: MITSF) (OTC: MITSY) is one of the Japanese stocks that Buffett favors. It trades at almost 11.4 times trailing-12-month earnings.
8. Sumitomo
I mentioned Sumitomo (OTC: SSUM.F) (OTC: SSUM.Y) as the third Japanese stock that Buffett bought in the last twelve months due to its trailing earnings multiple of 12.9.
9. Itochu
Itochu (OTC: ITOCF) (OTC: ITOCIE) is the next Japanese trading house on the list. The shares trade at about 13.1 times trailing-12-month earnings.
10. Mitsubishi
Buffett invested the most in it Mitsubishi (OTC: MSBHF) of the five Japanese stocks. It is the largest of the group by market capitalization. However, I placed it at number 10 because it is the most expensive of the five stocks, with an earnings multiple of almost 15.
11. Chubb
At the end of 2023, Berkshire made a ‘mysterious investment’: a purchase that he was allowed to keep confidential. That investment turned out to be a large non-life insurance company Chubb (NYSE: CB).
I don’t expect Chubb to be a big winner. However, it is attractively valued, with a forward earnings multiple of 12.3. Income investors will also like that Chubb has increased its dividend 31 years in a row.
12. Capital one financial
Buffett added more shares Capital one financial (NYSE: COF) added to Berkshire’s portfolio in the second quarter of 2023. Although the stock has soared after putting behind last year’s banking crisis concerns, it is still cheap, with an earnings multiple of 9.9.
13. and 14. Liberty Sirius XM Group (tie)
I lumped together two tracking stocks that Buffett bought last year for the No. 13 spot: Liberty Sirius XM Group Series A (NASDAQ:LSXMA)And Liberty Sirius XM Group Series C (NASDAQ:LSXMK). Both stocks reflect Liberty Media’s stakes in satellite radio operator Sirius XM Holdings (NASDAQ: SIRI). I’m not excited about Sirius XM’s growth prospects, but these tracking stocks offer a cheaper way to invest in the company.
15. Sirius XM Holdings
Buffett also took a small direct stake in Sirius XM in the fourth quarter of 2023. I ranked the company behind the tracking stocks because of its higher future earnings.
16. Atlanta Braves Holdings
Speaking of Liberty Media’s stock tracking, Buffett has also bought shares of another company in the past twelve months — Atlanta Braves Holdings (NASDAQ: BATR.A). I like baseball. I love the Braves. However, I’m not sure how much growth this stock will deliver.
17. Formula 1 group
Finally, Buffett added shares of Formula 1 group (NASDAQ: FWON.A) added to Berkshire’s portfolio in the third quarter of 2023. It is also a tracker of Liberty Media for its investments in Formula 1 racing. My biggest concern with this stock is that it is trading at a forward earnings multiple of 48.3.
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Keith Speights has positions in Berkshire Hathaway, Chevron and Chubb. The Motley Fool holds positions in and recommends Berkshire Hathaway, Chevron, Lennar, and NVR. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
Every stock Warren Buffett bought in the last 12 months, ranked from best to worst, was originally published by The Motley Fool
