2024 will go down in history as the year that legendary investor Warren Buffett started showing signs of slowing down after an illustrious career in the investment world. After losing his best friend and longtime partner, Charlie Munger, the Oracle of Omaha increasingly shows signs of relinquishing control of his investment empire.
Even with his investment company becoming the first non-tech giant to hit the $1 trillion mark on market cap, Buffett is slowly relinquishing control after years of tremendous success. Handpicked Greg Abel is now responsible for taking over the Buffett Empire after more than 60 years in the limelight.
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As Abel assumes control in making key investment decisions, Buffett continues sending shockwaves. Nevertheless, he has become a net seller, having trimmed stakes in some high-profile holdings, all but raising concerns about the market outlook.
At 94, Buffett has seen it all, having outperformed the S&P 500 over the years and generated significant returns for his investors. Since 1965, the billionaire investor has averaged returns of 19.8% through his investment firm, nearly double the 10.2% return of the S&P 500 over the same period. Nevertheless, he appears to have hit the peak of his investment career as he became a net seller after one of the longest bull runs.
The recent sales have taken Buffett’s cash haul to the $300 billion mark, which he can use to purchase a good chunk of the S&P 500 companies. Nevertheless, the billionaire investor has shown reluctance to invest in the cash-sitting valuations that have gotten out of hand.
Since Buffett has yet to carry out a massive investment this year, it does not come as a surprise. The advocate of value investing, which involves analyzing the market for undervalued stocks likely to generate long-term value, has been skeptical about valuations.
His reluctance also comes on outperformance in recent years, becoming extremely difficult due to the sheer size of Buffett’s investment portfolio. “We have no possibility of eye-popping performance” given that “there remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others,” Buffett is quoted as saying in an interview with CNBC.
With the S&P 500 up by more than 20% for the year, Buffett has indicated that the market might be too expensive to pursue opportunities at current levels. Consequently, he has opted to stay in cash while locking in profits through buybacks and dividends in some of his top investment plays.
Nevertheless, the market is still full of some of the best Warren Buffett stocks that analysts see material upside to. In the aftermath of the US Federal Reserve cutting interest rate by 50 basis points and indicating the prospects of further cuts before year-end, opportunities are increasingly emerging around some of Buffett’s top investment plays
Even as Buffett waits for the market to correct to deploy the more than $300 billion at his disposal, there are still opportunities to pursue as interest rates trend down. With that, let’s look at the 8 best Warren Buffett stocks to buy according to analysts.
Our Methodology
To compile the list of the best Warren Buffett stocks to buy according to analysts, we sifted through Berkshire Hathaway’s Q2 2024 13F portfolio. We scanned all the 13F holdings and picked the 8 stocks that had the highest upside potential, as of September 24. We have ranked the stocks in ascending order based on their upside potential.
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).
8 Best Warren Buffett Stocks to Buy According to Analysts
8. VeriSign, Inc. (NASDAQ:VRSN)
Warren Buffett’s Q2 2024 Stake: $2.28 Billion
Analyst Upside Potential, as of September 24: 13.74%
Number of Hedge Fund Holders: 36
VeriSign, Inc. (NASDAQ:VRSN) is one of Warren Buffett’s technology investment plays, focusing on providing domain name registry services and internet infrastructure that enable internet navigation.
The company is experiencing little growth as in the past, as the World Wide Web is slowing due to the increase in existing sites’ content rather than new ones. Despite this, VeriSign, Inc. (NASDAQ:VRSN) remains a dependable, high-profit business that’s here to stay.
Over half of its revenue from last year was converted to net profit, almost matching the profits from the previous year. Both the company’s income and expenses also saw continuous growth.
It ended the second quarter with 351.5 million in domain name registrations, all of which pay a fee to it and are expected to safeguard its revenue base. VeriSign, Inc. (NASDAQ:VRSN)’s revenue base should remain intact because the internet will not likely go anywhere.
While Verisign does not offer dividends, as with most stocks that Buffett invests in, it has made a name for itself in returning value to shareholders through buybacks. Its share count has declined significantly, allowing investors to generate optimum returns on the shares they hold. Analysts on Wall Street rate VeriSign as a Buy with an average price target of $207.50, implying a 13.74% upside potential.
By the second quarter of 2024, 36 out of the 912 hedge funds tracked by Insider Monkey were shareholders of VeriSign, Inc. (NASDAQ:VRSN). The largest hedge fund shareholder was Warren Buffett’s Berkshire Hathaway, holding a stake of $2.28 billion.
In its Q1 2024 investor letter, Baron Asset Fund provided insights on VeriSign, Inc. (NASDAQ:VRSN):
“VeriSign, Inc. (NASDAQ:VRSN), a global provider of internet infrastructure and domain name registry services, manages the .com and .net domains. Shares of VeriSign declined because of continued weakness in new domain registrations, stemming largely from weaker demand in China. We believe that VeriSign maintains an exceptional competitive position and the contractual ability to raise prices. Longer term, we are encouraged by VeriSign’s opportunity to win the rights to administer the “.web” domain, produce substantial free cash flow, and generate attractive capital returns as it continues to prioritize share buybacks.”
7. Bank of America Corporation (NYSE:BAC)
Warren Buffett’s Q2 2024 Stake: $41.08 Billion
Analyst Upside Potential, as of September 26: 15.69%
Number of Hedge Fund Holders: 92
Bank of America Corporation (NYSE:BAC) is arguably one of the best Warren Buffett stocks to buy, according to analysts, to gain exposure in the US banking sector. Best known for offering an array of banking services and investment products, it holds over $2 trillion in customer deposits, affirming its stability and credibility.
The nation’s second-largest bank in terms of assets has always been Buffett’s go-to banking stock owing to its solid growth metrics and ability to return value through dividends. However, Buffett has made significant divestments in his portfolio in recent times. Berkshire Hathaway disclosed that it had offloaded 5.8 million Bank of America Corporation (NYSE:BAC) shares, resulting in net proceeds of $230 million.
The sale of Bank of America Corporation (NYSE:BAC) does not imply Buffett is losing confidence in the bank’s long-term prospects. Instead, it may be part of a strategy of locking profits, given that the stock accounts for a significant chunk of the portfolio.
While its revenue remained unchanged in Q2 2024, marking a 1% increase to $25.4 billion, its net interest income decreased by 3% to $13.7 billion. Additionally, its earnings per share dropped from $0.88 to $0.83.
It is one of the banks well poised to feel the impact of the Federal Reserve’s moves to cut interest rates by 50 basis points while planning to cut further before year end. The reduction in credit spreads due to lower interest rates is expected to lead to a decrease in net interest income.
Nonetheless, a more robust economy benefits Bank of America Corporation (NYSE:BAC), potentially boosting credit card usage and consumer and business loans, reducing provisions for credit losses, and increasing demand for home refinancing and mortgages.
While Bank of America Corporation (NYSE:BAC) is up for the year, it is still trading at a discount at a price-to-earnings multiple of 10.91, backed by a 2.65% dividend yield. On the other hand, 18 analysts on Wall Street rate the stock as a buy with a $45.41 price target, implying a 15.69% upside potential.
In the second quarter of 2024, 92 hedge funds held positions in the stock, with total investments reaching $48.1 billion. By June 30, Berkshire Hathaway emerged as the largest shareholder, holding a stake valued at $41.1 billion.
ClearBridge Investments’ ClearBridge Value Equity Strategy stated the following regarding Bank of America Corporation (NYSE:BAC) in its first quarter 2024 investor letter:
“We added several new positions during the quarter. Our largest new addition was Bank of America Corporation (NYSE:BAC), one of the world’s leading financial institutions, serving some 66 million consumer and small business clients across the U.S. as well as large corporations, financial institutions and governments globally. We believe that the interest rate pressure that Bank of America faced in early 2023 has subsided, and risks surrounding deposit outflows have abated, which should allow the company to improve its book value and capital growth as well as benefit from a rebound of capital markets activity.”
6. Amazon.com, Inc. (NASDAQ:AMZN)
Warren Buffett’s Q2 2024 Stake: $1.93 Billion
Analyst Upside Potential, as of September 26: 15.96%
Number of Hedge Fund Holders: 308
Amazon.com, Inc. (NASDAQ:AMZN) is arguably one of the best Warren Buffett Stocks to buy, according to analysts. It’s a market leader in e-commerce and cloud computing. Additionally, the company’s increased focus on artificial intelligence has made it a firm favorite amid the AI frenzy.
Amazon.com, Inc. (NASDAQ:AMZN)’s entry into the generative AI sector has generated the highest level of excitement for its stock in the last 24 months. Yet, the truth behind this excitement goes beyond mere speculation. Users of Amazon’s AI offerings are discovering real benefits from them. As Amazon continues to pour resources into enhancements and new functionalities, it ought to maintain its leading role in cloud computing and secure a larger portion of the market.
Thanks to the integration of AI features, Amazon.com, Inc. (NASDAQ:AMZN) recorded an 18.8% increase in sales growth in the second quarter under its cloud computing unit, Amazon Web Services. While AI represents one of the biggest catalysts that continue to fuel Amazon’s underlying growth, advertising is also emerging as an important segment.
Amazon.com, Inc. (NASDAQ:AMZN)’s advertising division has been one of its most rapidly expanding areas, experiencing a 20% increase in revenue from the previous year, or a $2 billion rise. It already boasts unparalleled visibility for advertisers looking to reach Amazon shoppers through its sponsored ads on its online shopping site, and its latest feature, an ad-supported Prime video service, is opening up new avenues for both advertisers and Amazon.
The online shopping sector is also showing steady growth, with more units sold than in sales as shoppers look for cheaper deals. Growth in e-commerce and advertising on the cloud should continue diversifying and strengthening Amazon.com, Inc. (NASDAQ:AMZN)’s revenue base, allowing it to generate long-term value.
While the company trades at a premium with a price-to-earnings multiple of 32, it is expected to enjoy robust growth in various segments. Analysts on Wall Street rate the stock as a buy with a $223.25 price target, implying 15.96% upside potential.
Overall, AMZN was held by 308 hedge funds, and Fisher Asset Management was the largest shareholder.
Meridian Hedged Equity Fund mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter. Here is what the firm said:
“Amazon.com, Inc. (NASDAQ:AMZN) is a global technology company that operates e-commerce, cloud computing, digital advertising, and other businesses. We own Amazon because we believe it is well-positioned to benefit from several strong secular trends, including the shift to online shopping, the growth of cloud computing, and the increasing importance of digital advertising. The company exceeded expectations in the first quarter, with cloud-computing revenue growth accelerating, driven by easing cost optimization pressures and the ramp of generative AI workloads. The North American retail segment drove record operating margins, highlighting the success of Amazon’s efforts to improve efficiency and lower its cost to serve. International retail also showed promise, as emerging markets steadily progressed towards profitability. Given the strength across these key segments, we continue to hold the position in the company.”
5. Visa Inc. (NYSE:V)
Warren Buffett’s Q2 2024 Stake: $2.18 Billion
Analyst Upside Potential, as of September 26: 17.50%
Number of Hedge Fund Holders: 163
Visa Inc. (NYSE:V) is a payment technology company in the US and internationally. Widely regarded as one of the best stocks for exposure to the global digital payments sector, Visa facilitates transactions across more than 200 markets, connecting 4 billion account holders with over 130 million merchants and 14,500 financial institutions.
Visa Inc. (NYSE:V)’s dominance in the payments industry is evident, with an estimated 61% share of the US payments volume. As more customers use Visa Inc. (NYSE:V), it becomes increasingly attractive to merchants, driving further growth. Strategic partnerships and a focus on technology, such as AI, are expected to support Visa’s growth. For instance, Visa’s acquisition of AI-focused Featurespace will help manage real-time fraud and protect its payment ecosystem.
Visa Inc. (NYSE:V) aims to capitalize on the $20 trillion global consumer payments opportunity, focusing on acceptance expansion, e-commerce, and product innovation. The company remains optimistic about sustaining growth in new flows, primarily in Visa Direct and the commercial business.
In Q3 2024, the company reported adjusted EPS of $2.42, up from $2.16 the previous year, with a 7% increase in payment volumes. Net revenue reached $8.9 billion, a 10% year-over-year increase. Service revenue rose 8% to $4 billion, data processing revenue increased 9% to $4.5 billion, and international transaction revenue grew 9% to $3.2 billion. Visa reaffirmed its full-year 2024 outlook, expecting low double-digit revenue growth and a low-teens EPS increase.
Visa Inc. (NYSE:V) is currently trading at a price-to-earnings multiple of 24.21, with a dividend yield of 0.73%. Analyst ratings for Visa Inc. (NYSE:V) are overwhelmingly positive, with 21 analysts offering ratings in the past three months. The average 12-month price target is $315.42, with a high forecast of $345 and a low forecast of $275, representing a 17.50% increase from the last price of $268.45. This strong buy consensus reflects the confidence analysts have in Visa’s continued growth and market leadership.
By the end of Q2 2024, 163 hedge funds held stakes in Visa Inc. (NYSE:V), with Chris Hohn’s TCI Fund Management being the largest shareholder, holding stakes valued at $4.4 billion.
Here is what Wedgewood Partners said about Visa Inc. (NYSE:V) in its Q2 2024 investor letter:
“Visa Inc. (NYSE:V) detracted from performance despite healthy corporate results. The company grew earnings per share +12% as payment volume growth was up +8% and cross-border payment grew +16%, adjusted for currency. There are over 4.4 billion Visa debit and credit cards in circulation generating over $15 trillion in volume over the past 12 months. There is another estimated $10 trillion in cash and check volume, globally, which we think Visa can continue to move over to its electronic payment rails. In addition, the company has spent the past several years extending its payment capabilities into new flows of commerce, particularly for business-to-business transactions. This is another, extremely large (+$200 trillion) long-term growth opportunity for Visa that we believe investors are ignoring.”
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.
3. Chevron Corporation (NYSE:CVX)
Warren Buffett’s Q2 2024 Stake: $18.55 Billion
Analyst Upside Potential, as of September 26: 23%
Number of Hedge Fund Holders: 64
Chevron Corporation (NYSE:CVX) is one of Buffett’s investment plays for exposure in the energy sector. While the company has felt the full brunt of oil prices plunging from above the $80 barrel level, it remains one of the companies well poised to navigate the challenging environment.
Chevron Corporation (NYSE:CVX) operates as an integrated energy firm throughout the industry, meaning it is involved in all aspects of the energy sector. This includes involvement in oil and natural gas exploration and production (upstream), the transportation of energy (midstream), and the processing of chemicals and refining (downstream). At any given moment, each of these areas of the industry can show varying levels of performance.
The company’s competitive edge stems from having a balance sheet capable of weathering down any energy industry cycle while continuing to reward investors with dividends. Additionally, the company boasts of one of the lowest debt-to-equity ratios of 0.15 as it pays more attention to its balance sheet.
Chevron Corporation (NYSE:CVX) can increase its financial strength when the oil price falls, enabling the company to keep investing in its operations and distributing dividends. It’s worth noting that the dividend has risen for an impressive 37 years straight, marking an extraordinary achievement considering Chevron’s competitive industry.
As oil prices rise again, as they invariably do, Chevron Corporation (NYSE:CVX) decreases its financial exposure to prepare for the next economic slump. For conservative investors seeking a reliable energy stock that can weather any storm, finding a more attractive alternative than Chevron’s 4.5% dividend yield would be challenging. The stock commands an average buy rating on Wall Street with a $177.08 price target, implying 23% upside potential.
In the second quarter of 2024, 64 hedge funds held positions in the stock, with total stakes reaching $22.41 billion. By June 30, Berkshire Hathaway was the largest shareholder, holding a position valued at $18.55 billion.
In its fourth quarter 2023 investor letter, Diamond Hill Capital’s Diamond Hill Large Cap Strategy commented on Chevron Corporation (NYSE:CVX):
“Other bottom contributors included Chevron Corporation (NYSE:CVX), Carrier Global and Becton, Dickinson. Shares of integrated oil and gas company Chevron were pressured as global oil production is growing — particularly in the US, which has now surpassed its past production levels — in turn pressuring oil prices and company profit margins.”
2. Sirius XM Holdings Inc. (NASDAQ:SIRI)
Warren Buffett’s Q2 2024 Stake: $376.05 Million
Analyst Upside Potential, as of September 26: 37.40%
Number of Hedge Fund Holders: 33
Sirius XM Holdings Inc. (NASDAQ:SIRI) is a communications services investment play that operates as an audio entertainment company. It provides music, sports, entertainment, comedy, talk, news, traffic and weather channels, and other content.
The leading satellite radio provider carried out a one-for-10 share stock split while it was in no danger of being delisted from the NASDAQ. The stock split was one of the catalysts behind the share price’s more than doubled value, and it was seen as one of the plays geared toward attracting institutional investors. The stock split caused the company to reduce its share count from a high of 3 billion to around 339 million.
In addition to the reverse stock split, Sirius XM Holdings Inc. (NASDAQ:SIRI) stock also rose when the company merged with Liberty Sirius XM Group (Liberty Media’s Sirius XM tracking stock). The merger allows Sirius XM to simplify its capital structure and strategy for continued success.
In the second quarter of 2024, Sirius XM Holdings Inc. (NASDAQ:SIRI)’s revenue dropped by 3% compared to the previous year, reaching $2.2 billion. The company’s net income was $316 million, leading to diluted earnings per share of $0.08, which increased from $310 million in the same quarter of the previous year.
Within its core business, Sirius XM Holdings Inc. (NASDAQ:SIRI) had 33 million subscribers who paid directly, but this number saw a decrease of 100,000 during the same timeframe, with a self-pay subscriber churn rate of 1.5%. The revenue from this segment, which was $1.6 billion, experienced a 5% decline year-over-year, attributed to a smaller average number of self-pay subscribers and a $0.42 increase in the average revenue per user in the second quarter.
Even as Sirius XM Holdings Inc. (NASDAQ:SIRI) remains under pressure, it returns value to shareholders. The company has confirmed a $1.2 billion buyback program. It has also affirmed its commitment to the dividend plan with a yield of 4.3%. The buyback and dividend program could help offer support to the stock.
Analysts on Wall Street believe SiriusXM is a strong buy with an average price target of $33.14, implying 32.83% upside potential. Additionally, the stock trades at a discount with a price-to-earnings multiple of 6.60.
In the second quarter of 2024, Sirius XM Holdings Inc. (NASDAQ:SIRI) experienced a notable surge in interest from leading money managers. Insider Monkey’s database shows that hedge fund positions in the company increased from 17 to 33, with these investments collectively valued at around $530 million.
1. Occidental Petroleum Corporation (NYSE:OXY)
Warren Buffett’s Q2 2024 Stake: $16.09 Billion
Analyst Upside Potential, as of September 26: 37.79%
Number of Hedge Fund Holders: 62
Occidental Petroleum Corporation (NYSE:OXY) is an energy company that engages in acquiring, exploring, and developing oil and gas properties. Buffett started investing in the company in 2022 and has continuously bolstered his stakes.
The legendary investor is optimistic about the future trajectory of oil prices. Occidental Petroleum Corporation (NYSE:OXY) possesses the operational advantage needed to thrive in such circumstances while keeping a financial structure that can withstand adverse situations, at least temporarily.
Additionally, he has consistently emphasized the significance of effective management, of which Occidental has always ticked the box. This is particularly true in the field of resource extraction, where the proper allocation of capital and the efficiency of operations are crucial.
A competent management team with a strategic perspective can make a significant difference. Thanks to proper management, Occidental Petroleum Corporation (NYSE:OXY) boasts a breakeven price for oil below $60 per barrel, ensuring it makes a profit with oil prices above the $70 barrel level.
The company has also engaged in several multi-billion-dollar acquisition deals as it continues to expand its footprint and strengthen its competitive edge. It acquired CrownRock’s holdings assets in the Midland Basin and, conversely, strengthened its assets. Thanks to the contribution from CrownRock, the midpoint of OXY’s overall company output and forecasts have risen from 1.25 million barrels of oil equivalents (BOE) to around 1.32 million BOE daily.
Occidental Petroleum Corporation (NYSE:OXY) has also bought back billions of dollars of its shares and paid out a substantial dividend, which, given the current stock prices, offers around a 1.7% return, affirming why it is one of the best Warren Buffet stocks to buy, according to analysts given its high shareholder returns.
Based on analysts’ average price target, Occidental Petroleum Corporation (NYSE:OXY) has a 37.79% upside potential. The stock holds a consensus rating of Moderate Buy, derived from 6 buy ratings, 10 hold ratings, and 1 sell rating. According to 17 Wall Street analysts, the average 12-month price target is $70.44, with a high estimate of $81.00 and a low estimate of $59.00.
By the end of the second quarter of 2024, the number of hedge funds holding stakes in Occidental Petroleum Corporation (NYSE:OXY) rose to 62 from 61, with the total value of these stakes exceeding $18.52 billion.
The best Warren Buffett stocks to buy according to analysts are companies with significant upside potential and likely to generate long-term value owing to their solid underlying fundamentals. However, given that the artificial intelligence arms race is just but starting, there are under-the-radar AI stocks trading at highly discounted valuations that hold greater promise for anyone looking to diversify their portfolio. If you are looking for an AI stock that is more promising than OXY, check out our report about the cheapest AI stock.
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