Has Warren Buffett given up on the stock market? Not entirely. Sure, the legendary investor has been a net seller of stocks for eight consecutive quarters and will extend that streak. Nevertheless, Buffett remains to be buying at the least just a few stocks for Berkshire Hathaway‘s portfolio.
Buffett bought 10 stocks in all of 2024 (excluding buybacks of Berkshire’s shares). Which is the most effective of the bunch for 2025?
Several of the stocks Buffett bought last 12 months were existing positions for Berkshire. For instance, he began aggressively buying shares of property and casualty insurer Chubb(NYSE: CB) in 2023 without revealing which stock was being bought until early 2024.
Buffett added to Berkshire’s already large stake in Occidental Petroleum(NYSE: OXY) in the primary and second quarters of 2024. A regulatory filing also disclosed additional buying of Occidental stock by Berkshire in December. One other filing in early January disclosed that Berkshire had scooped up more shares of domain name registry service and web infrastructure provider Verisign(NASDAQ: VRSN) at the tip of 2024.
Liberty Media continued to be a favourite for Buffett last 12 months. He bought the category A and sophistication C shares of Liberty Media SiriusXM Holdings, tracking stocks for Liberty Media’s positions in Sirius XM Holdings(NASDAQ: SIRI). He also added more shares of Sirius XM itself.
There have been some recent additions to Berkshire’s portfolio, too. In 2024’s Q2, Buffett initiated recent positions in aerospace and electronics company Heico(NYSE: HEI) and cosmetics retail chain operator Ulta Beauty(NASDAQ: ULTA). In Q3, he bought shares of Domino’s Pizza(NASDAQ: DPZ) and swimming pool supply company Pool Corporation(NASDAQ: POOL).
We will cross two of Buffett’s 2024 purchases off the list for consideration. Liberty Media SiriusXM Holdings merged with Sirius XM in September.
Valuation is a serious concern for one more stock Buffett bought last 12 months. Heico’s shares trade at nearly 53 times forward earnings. While the corporate is growing sales and earnings rapidly, I’m undecided its growth justifies its premium price.
Domino’s Pizza and Chubb ranked because the two biggest winners last 12 months among the many 10 stocks Buffett bought. Chubb has significant exposure to losses from the recent Los Angeles area wildfires, which could hamper its stock performance in 2025. I believe that Domino’s could keep its momentum going, though.
In his letter to Berkshire Hathaway shareholders last 12 months, Buffett included Occidental as one in every of only a handful of stocks he plans to own “indefinitely.” I agree with him that Oxy is an excellent stock to purchase and hold for the long run. Nevertheless, oil and gas prices could decline in 2025 with the incoming Trump administration’s policies that promote increased domestic production. For this reason, I’m uncertain about how well Occidental’s stock will perform over the near term.
Buffett (or one in every of his two investment managers) may need renewed confidence in Verisign based on the year-end purchases of the stock. I’m not as gung ho about Verisign, though: Its growth prospects in 2025 don’t seem like all that strong to me.
Wall Street thinks Pool and Ulta will deliver strong gains over the following 12 months. I won’t be surprised if analysts are proven right. But I think one other stock Buffett bought last 12 months may very well be poised to be a fair larger winner in 2025.
You almost certainly noticed that I didn’t mention Sirius XM within the previous evaluation of contenders. There’s an easy reason why: It’s my pick for the most effective of the bunch for 2025.
Sirius XM performed dismally last 12 months with its shares plunging 58%. Because of this, though, the stock is dirt low cost with a forward-earnings multiple of only 6.4. I believe this attractive valuation was the fundamental factor behind Buffett buying a lot of the stock in 2024.
Income investors will almost actually view Sirius XM as the most effective pick among the many stocks Buffett bought last 12 months. Its forward dividend yield stands at 5.15%, higher than the yields of any of the opposite nine stocks.
Granted, there isn’t any consensus about Sirius XM’s prospects on Wall Street. Only three of the 14 analysts surveyed by LSEG in January rated the stock as a “buy” or a “strong buy.” Six beneficial holding Sirius XM, while the others slapped “underperform” or “sell” rankings on the stock. Nevertheless, the common 12-month price goal for Sirius XM reflects an upside potential of just about 22%.
I’m not 100% confident that Sirius XM will likely be an enormous winner this 12 months. And I feel other Buffett stocks (including Occidental) may very well be higher picks over the long term. But the probabilities for Sirius XM to rebound look pretty good to me. I’d bet Buffett agrees.
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Keith Speights has positions in Berkshire Hathaway and Chubb. The Motley Idiot has positions in and recommends Berkshire Hathaway, Domino’s Pizza, Ulta Beauty, and VeriSign. The Motley Idiot recommends Heico and Occidental Petroleum. The Motley Idiot has a disclosure policy.