8 Best Warren Buffett Stocks to Buy According to Analysts

4. Ally Financial Inc. (NYSE:ALLY)

Warren Buffett’s Q2 2024 Stake: $1.15 Billion

Analyst Upside Potential, as of September 26: 21.32%

Number of Hedge Fund Holders: 45

Ally Financial Inc. (NYSE:ALLY) is a digital financial service company that provides financial products through Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations.

The stock has been under pressure in recent months on management, reiterating that credit challenges have intensified as customers struggle with high inflation and high interest rates. Nevertheless, the company’s outlook is expected to improve as economic conditions improve in the aftermath of the Federal Reserve cutting interest rates by 50 basis points.

Customers have been cutting back on loans amid high interest rates exacerbated by economic uncertainty. However, that should change as the FED embarks on rate cuts heading into yearend to support the economy.

Ally Financial Inc. (NYSE:ALLY) is focused on controlling its capital and spending amid the challenging business environment. Likewise, its net interest margin (NIM) in the third quarter is expected to expand in the low end of the 5-15 bps range from 3.3% in the second quarter of 2024. It should increase more in the latter part of the year and hit a range of 3.45-3.50%.

While trading at a price-to-earnings multiple of 6.85, Ally Financial Inc. (NYSE:ALLY) is rated as a Buy with an average price target of $42, implying a 21.32% upside potential.  It also comes with a 3.47% dividend yield that should excite income-focused investors.

At the end of Q2 2024, 45 hedge funds tracked by Insider Monkey held stakes in Ally Financial Inc. (NYSE:ALLY), compared to 47 in the previous quarter. These stakes have a total value of over $2.36 billion. With 29 million shares, Berkshire Hathaway was the company’s leading stakeholder in Q2.