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Some of Warren Buffett’s stocks have been absolute stinkers. There, I said it. But I still think Buffett is one of the greatest investors of all time and a true national treasure.
I also believe that the Oracle of Omaha has quite a few winners in Berkshire Hathawayof (NYSE: BRK.A) (NYSE: BRK.B) wallet too. Here are three Buffett stocks that are particularly worth buying right now.
Image source: The Motley Fool.
1. Buffett’s second favorite song: Apple
Everyone knows that Berkshire Hathaway itself ranks among Buffett’s favorite stocks. But her second favorite is definitely Apple (NASDAQ: AAPL). Buffett called the tech giant “probably the best company I know in the world.” With that kind of approval, it’s no surprise that Apple is Berkshire’s biggest holding company.
Some might think Apple stock is near a nosebleed level, with stocks trading at 31 times expected earnings. However, I believe there is plenty of room to run. I’m not alone: Wedbush analyst Daniel Ives believes Apple could jump at least 27% over the next year and maybe even skyrocket over 60%.
Ives and I share the same bullish view on the outlook for iPhone demand. The “G” of 5G (which newer iPhone models support) could mean gigantic instead of gen. I expect iPhone sales and the ecosystem of services built around it to continue to soar.
As Steve Jobs said, there is one more thing. I’m cautiously optimistic about Apple’s plans for a self-driving car. The company would team up with Hyundai and This to make the cars. Apple doesn’t need to gain a huge share of the self-driving car market to drive growth.
2. A great addition in 2020: Bristol Myers Squibb
I saw the purchase of Bristol Myers Squibb (NYSE: BMY) as one of Berkshire’s best additions to its portfolio last year. I think the large pharmaceutical stock has several advantages.
On the one hand, the BMS is cheap. Its shares only trade at eight times expected earnings. Certainly, there is a reason behind this discount assessment. Revlimid, a successful blood cancer drug, faces generic competition from 2022.
However, the range of BMS includes several other growth drivers. The anticoagulants Eliquis, the autoimmune drug Orencia, and the cancer immunotherapies Opdivo and Yervoy have strong prospects. New drugs, including Reblozyl and Zeposia, are expected to be rising stars for the company. So should just approved liso-cel cell therapy and another promising candidate from the ide-cel pipeline.
As a bonus, BMS offers an attractive dividend which currently yields more than 3%. I think this big pharmaceutical industry was a great choice for Buffett in 2020 and remains a great choice for investors now.
3. Loading in advance: Mastercard
MasterCard (NYSE: MA) is not a new stake in the Berkshire portfolio. The fintech giant has been a big winner for Buffett for some time. I expect him to keep his winning ways.
Of course, some might think Mastercard looked like a loser based on its fourth quarter results. Net income and profits have been declining year on year. The COVID-19 pandemic took a toll on travel spending, causing Mastercard cross-border volume to drop by 29%.
However, Mastercard is expected to see its activity rebound as concerns about COVID-19 dissipate. I hope this is exactly what will happen as more and more people around the world get vaccinated over the next few months.
Longer term, Mastercard will benefit from abandoning cash. I think this is one of the best growth stocks Buffett has.
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