Warren Buffett’s Latest Portfolio: 5 Undervalued Stock Picks

1. Bank of America Corporation (NYSE:BAC)

Number of Hedge Fund Holders: 99

1-Year Forward P/E Ratio: 10.92x

Warren Buffett’s Berkshire Hathaway’s Holdings: $31,444,432,000

Percentage of Warren Buffett’s Berkshire Hathaway’s Portfolio: 10.47%

Bank of America Corporation (NYSE:BAC) is a North Carolina-based diversified financial services company.

Bank of America Corporation’s (NYSE:BAC) forward P/E multiple of 10.92x reflects a discount of over 13% from its average five-year forward P/E multiple of 12.56x. Mike Mayo at Wells Fargo believes that after going through the data for the last five-to-six decades, it can be concluded that the increase in the benchmark interest rates has a more important correlation with the net interest margins of a bank as compared to the shape of the yield curve. The analyst sees this positive correlation being underappreciated by the broader market. Wells Fargo anticipates the benchmark interest rate to reach the 4% level by the end of 2022. This forecast is higher than the consensus estimates of 3.75%. Mayo has given Bank of America Corporation (NYSE:BAC) an ‘Overweight’ rating.

Here’s what ClearBridge Investments said about Bank of America Corporation (NYSE:BAC) in its Q2 2022 investor letter:

“In the second quarter we made a sizable add to our position in Bank of America (NYSE:BAC) as our bank holdings have significant leverage to rising interest rates. The Fed, unfortunately, was late to realize inflation’s magnitude, maintaining for far too long that inflationary pressures were merely transitory. This mistake caused inflation to accelerate, necessitating a larger intervention than if the Fed had moved sooner.”

For more enticing stock picks, check out the 11 Best Artificial Intelligence Stocks To Buy Now and the Top 8 Stock Picks of Jeff Ubben’s Inclusive Capital.

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