Top 10 Stocks in Warren Buffett's Berkshire Hathaway Portfolio
An analysis of the Berkshire Hathaway Portfolio
Dear fellow investor,
Welcome to this edition of "How to Invest Like the Best," formerly known as Global ValueReport. The new name reflects our mission to help you learn from the greatest investors and uncover winning investment ideas from Wall Street.
This article examines the top 10 Berkshire Hathaway stocks, carefully selected based on a comprehensive total return ratio which considers the sum of annual EPS growth and dividend yield divided by the PE ratio. This methodology highlights stocks that not only offer growth but also represent value.
In this list, we exclude Liberty-related stocks to focus on a diverse array of industries including media, healthcare, insurance, and more. These companies are part of Buffett's meticulously crafted portfolio and demonstrate why Berkshire Hathaway continues to be a beacon for investors seeking reliable returns and robust growth.
Let's delve into these top-performing stocks, providing a snapshot of each company's profile, the investment thesis that underpins its inclusion, as well as the key pros and cons to consider. Whether you’re an ardent Buffett follower or simply seeking sound investment opportunities, this list aims to offer valuable insights into some of the most promising holdings within the Berkshire Hathaway portfolio.
Top Ten Berkshire Hathaway Stocks
Download the complete Berkshire Hathaway portfolio list in Excel:
1. Charter Communications Inc
Industry: Media
Price: $296.59
Fair value estimate: $387
Margin of safety: 23%
Rating: Undervalued
Market Cap: $41,883 million
Total Return Ratio: 4.5
Annual EPS Growth (5yr): 42.7%
Annual Sales Growth (5yr): 4.6%
PE Ratio: 9.5
Dividend Yield: 0.00%
Charter Communications is a leading broadband connectivity company and cable operator serving more than 32 million customers in 41 states under the Spectrum brand.
Experienced strong growth in broadband subscribers and increasing average revenue per user, but growth is slowing and is valued as a mature company. Charter has been buying back a lot of shares, but pays no dividend. Of 26 analysts, 17 offer a buy recommendation and an average price target of $332. But price targets are very diverse. Even with a conservative growth estimate, the stock seems undervalued. The biggest risk is that the company can't regain growth.
Source: Investor presentation
Pros:
High return on equity
Significant EPS growth
Strong free cash flow
Cons:
Growth is slowing down
No dividend yield
Moderate net margin
Download the report:
2. DaVita HealthCare Partners Inc
Price: $139
Market Cap: $12,534 million
Total Return Ratio: 3.6
Annual EPS Growth (5yr): 57.1%
Annual Sales Growth (5yr): 1.3%
PE Ratio: 16.15
Dividend Yield: 0.00%
DaVita HealthCare Partners Inc is a leading provider of kidney care, delivering dialysis services to patients with chronic kidney failure and end-stage renal disease.
Investment Thesis: The growing prevalence of kidney disease and aging population supports long-term demand. Focus on cost efficiency and improved clinical outcomes drives profitability. According to our model DaVita is Fairly Valued.
Pros:
High EPS growth
Strong return on equity
Cons:
Low sales growth
No dividend yield
3. Lennar Corporation
Industry: Household Durables
Price: $145.93
Fair value estimate: $212
Margin of safety: 31%
Rating: Undervalued
Market Cap: $41,123 million
Total Return Ratio: 2.3
Annual EPS Growth (5yr): 22.0%
Annual Sales Growth (5yr): 10.7%
PE Ratio: 10.13
Dividend Yield: 1.17%
Lennar Corporation is one of the largest homebuilders in the United States, providing quality homes for all generations. Analysts expect and earnings growth of 4% this year and 12% next year.
Lennar, currently priced at $145.93, has a fair value estimate of $212, indicating a 31% margin of safety and is rated as undervalued.
Lennar is benefiting from strong housing demand driven by demographic trends. Focus on operational efficiency enhances profitability. Risks are high interest rates, slowing demand for homes, and recession. It is a cyclical business. But the company has a strong balance sheet.
Pros:
Strong balance sheet
Reasonable PE ratio
Cons:
Moderate dividend yield
Cyclical business
Read the report:
4. Chubb Ltd
Industry: Insurance
Price: $260.01
Market Cap: $106,911 million
Total Return Ratio: 2.0
Annual EPS Growth (5yr): 21.6%
Annual Sales Growth (5yr): 8.8%
PE Ratio: 11.54
Dividend Yield: 1.32%
Chubb Ltd is one of the world’s largest publicly traded property and casualty insurance company, offering a broad range of personal and commercial insurance products.
Investment Thesis: Strong underwriting discipline and diverse product offerings support consistent profitability. Global presence provides growth opportunities.
Pros:
High net margin
Solid free cash flow
Cons:
Lower dividend yield compared to industry peers
5. NVR Inc
Industry: Household Durables
Price: $7,656.13
Market Cap: $23,717 million
Total Return Ratio: 1.2
Annual EPS Growth (5yr): 19.8%
Annual Sales Growth (5yr): 5.9%
PE Ratio: 15.96
Dividend Yield: 0.00%
NVR Inc is a homebuilding and mortgage banking company. The company operates in two business segments: Homebuilding and Mortgage Banking.
Investment Thesis: Strong market presence and efficient operating model drive high returns on equity. Consistent demand for housing supports long-term growth.
Pros:
Exceptional return on equity
High free cash flow
Cons:
No dividend yield
6. Sirius XM Holding Inc
Sirius XM Holdings Inc. is the leading audio entertainment company in the U.S., offering satellite radio and streaming audio services. Buffett has several Liberty type of stocks because they are planning to merge. This is a special situation for more experienced investors.
Investment Thesis: Strong subscription model provides recurring revenue. Investment in content and technology enhances user experience and retention. The stock is reasonably priced with a PE ratio of 8.18 and has a high dividend yield. But a negative return on equity.
7. Aon PLC
Aon PLC is a leading global professional services firm providing a broad range of risk, retirement, and health solutions.
Investment Thesis: Expanding portfolio of services and global presence support stable revenue growth. Focus on innovation and client solutions drives profitability.
Pros:
Strong EPS growth
High net margin
Cons:
Negative return on equity
Low dividend yield
8. Chevron Corp
Chevron Corporation is a multinational energy corporation engaged in every aspect of the oil, natural gas, and geothermal energy industries.
Investment Thesis: Strong balance sheet and diversified operations support stable cash flow and dividends. Focus on sustainable energy initiatives positions the company for future growth.
Pros:
High dividend yield
Diversified revenue streams
Cons:
Moderate sales growth
Susceptible to oil price volatility
9. T-Mobile US Inc
T-Mobile US, Inc. provides mobile communications services in the United States. The company has been growing very fast the last 10 years but is slowing down since 2021.
Source: Morningstar
10. Jefferies Financial Group Inc
Jefferies Financial Group Inc. is one of the world’s leading full-service investment banking and capital markets firms offering a full range of investment banking, equities, fixed income, asset and wealth management products and services.
Stay tuned for our next edition, where we share more insights from top investors. Happy investing!
Best regards,
Jasper Bronkhorst
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Disclaimer: The information provided in this newsletter is for educational purposes only and does not constitute financial advice. Always conduct your own research or consult with a financial advisor before making investment decisions.