In this article, we will take a look at the 10 best performing Warren Buffett stocks in 2024.
Warren Buffett has etched his name as the most successful investor on Wall Street by steering a small company into a trillion-dollar empire. The milestone stems from the billionaire investor’s value investing strategy that has always focused on undervalued stocks with tremendous upside potential.
In a year where the overall market has been on an upward trajectory thanks to solid financial results amid a resilient economy and expectations of interest rate cuts, Buffett has outperformed the overall market. His investment firm gaining more than 28% compared to a 17% gain for the S&P 500 over the same period underscores Buffett’s competitive edge in picking and investing in market-beating stocks.
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Buffett, who rose to prominence in the 1960s, has transformed his investment firm into a conglomerate with stakes in companies in the insurance, railroad, retail, manufacturing, and energy sectors. According to Andrew Kligerman, TD Cowen’s Berkshire analyst, Buffett’s performance in 2024 is a testament to his stock-picking skills focused on businesses trading at relatively lower valuations.
Nevertheless, the billionaire investor has been in defensive mode despite the stellar performance for the better part of 2024. Concerned by valuations getting out of hand amid the high interest rate environment and deteriorating economic conditions, Buffett has dumped massive amounts of stocks in companies whose valuations got out of hand.
With the massive sale of stakes, the billionaire has successfully generated significant value as most of the stocks had gained significantly amid the bull run in the market. The stock sale has also allowed the billionaire investor to raise the cash pile in his investment firm to a record $277 billion.
Although Buffett has previously argued against diversification, it’s understandable why his firm decided to reduce stakes in some of the companies. The investments had been a huge success for his firm, locking profits with the overall market at all-time highs.
The fact that Buffett invests through a conglomerate structure, often considered archaic, underscores his edge in the highly competitive investment world. At 94, the ‘Oracle Omaha’ has started showing signs of slowing down. The appointment of Greg Abel as his successor signals he may not have a significant say in investment decisions in the near future.
What might come as a surprise is that the best-performing Warren Buffett stocks in 2024 are not among the big names that account for the biggest share of Buffett’s portfolio. Instead, they are companies that have remained resilient amid the high interest rate environment that has rattled the stock market.
Additionally, they boast of stocks well positioned to benefit as the macroeconomic environment improves, with the US Federal Reserve cutting interest rates by 50 basis points. The US economy is avoiding recession as the Fed continues to tweak its monetary policy, which should allow the companies to generate more shareholder value and, therefore, continue powering high.
Buffett’s investment portfolio also includes companies with tremendous potential and ability to generate free cash flow owing to resilient core businesses. Consequently, the companies have emerged as a source of passive income, allowing Buffett to generate billions of dollars in dividends. Last year alone, the Oracle of Omaha raked $4.36 billion in dividends from his investments.
Our Methodology
We analyzed Berkshire Hathaway’s Q2 2024 portfolio and picked the best-performing stocks on a year-to-date basis, as of September 20. The list is sorted in ascending order of the year-to-date performance of the stocks.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Performing Warren Buffett Stocks in 2024
10. Moody’s Corporation (NYSE:MCO)
Warren Buffett’s Q2 2024 Stake: $10.38 Billion
Year to Date Gain as of September 20: 28.36%
Number of Hedge Fund Investors In Q2 2024: 59
Moody’s Corporation (NYSE:MCO) is one of the best-performing Warren Buffett stocks in 2024 in the financial service sector. It specializes in providing a range of products and services that support the risk management activities of institutional participants in financial markets.
It is one of the oldest holdings in Buffett’s portfolio and continues to generate significant value in share price gains and dividend offerings. Its competitive edge stems from operating two robust businesses.
Moody’s Corporation (NYSE:MCO) runs a business that evaluates the creditworthiness of different bond issuers, including companies and governments. It holds a significant market position, facing competition primarily from S&P Global and Fitch Ratings. Additionally, it has an analytics division that employs data to assess risk.
Record-low interest rates have encouraged companies and government bodies to issue debt for over a decade. This has sustained the importance of Moody’s Corporation (NYSE:MCO)’s core operating division. Booming businesses have seen the stock sentiments receive significant powering to record highs.
Moody’s Corporation (NYSE:MCO) has moved to strengthen its business empire and reach the market. The firm revealed its purchase of Praedicat, a company that focuses on analytics for the casualty insurance industry. This deal is anticipated to improve Moody’s data and analytical capabilities, especially in the areas of casualty and liability risk assessment, but it is not expected to affect Moody’s financial performance for the year 2024 significantly.
The company delivered solid second-quarter results, with revenues increasing 22% to $1.8 billion. On the other hand, earnings came in at $600 million or $3.02 a share, up from $2.05 a share last year. Growth in the underlying core business and solid financial results is the catalyst behind the stock rallying by 28.36% and outperforming the 18% gain of the S&P 500.
In Q2 2024, 59 out of the 912 hedge funds monitored by Insider Monkey purchased shares of the firm. The largest hedge fund investor in Moody’s Corporation (NYSE:MCO) is Warren Buffett’s Berkshire Hathaway, which holds shares valued at $10.38 billion.
9. Lennar Corporation (NYSE:LEN)
Warren Buffett’s Q2 2024 Stake: $21.27 Million
Year to Date Gain as of September 20: 30.51%
Number of Hedge Fund Investors In Q2 2024: 60
Lennar Corporation (NYSE:LEN) is one of Buffett’s top investment players in the residential construction sector. It specializes in constructing and selling single-family attached and detached homes and purchasing, developing, and selling residential land.
Up by more than 30% for the year, it is one of the best-performing Warren Buffett stocks in 2024, shrugging off deteriorating economic conditions amid the high interest rates. Likewise, the rally looks set to continue as a move by the Fed to cut interest rates is expected to fuel activities in the homebuilding industry.
Lennar Corporation (NYSE:LEN) has rallied to all-time highs on investors getting buoyed by strong financial performance and an improving outlook in the housing construction business. The company delivered solid second-quarter results with earnings of $3.90, above estimates of $3.62 per share. Revenues totaled $9.42 billion against $8.73 billion in the same quarter last year.
Lennar Corporation (NYSE:LEN) benefits from a resilient US economy that has shrugged off recession amid the high interest rate environment. During the quarter, it recorded a 5% increase in new home orders at 20,587, underlining robust demand in the housing market. It now expects to deliver between 22,500 and 23,000 new homes and orders between 19,000 and 19300, underlining robust growth.
The stock is trading at a price-to-earnings multiple of 11 and appears undervalued, going by the robust growth, solid underlying fundamentals, and the fact that it rewards investors with a 1.04% dividend yield.
60 hedge funds hold long positions in Lennar Corporation (NYSE:LEN) in the second quarter of 2024, down from 75 in the previous quarter. Greenhaven Associates is the highest shareholder, with a stake worth $1.34 billion.