Warren Buffett is known as one of the most successful investors of all time. His company, Berkshire Hathaway, has seen tremendous growth over the years, thanks to Buffett’s strategic investments in companies like Coca-Cola, Bank of America, American Express, and Apple. However, amidst these well-known positions, there are some lesser-known stocks in Berkshire’s portfolio that are worth considering. In this article, we will highlight three of these underrated Warren Buffett stocks that are smart buys right now.
1. HP (NYSE: HPQ): Berkshire Hathaway recently took an 11% stake in HP, one of the world’s leading producers of PCs and printers. Although the company has faced challenges in stabilizing its core businesses, HP still offers an attractive opportunity for patient investors. The stock is currently very cheap, trading at a low multiple of forward earnings, and it also pays a generous forward dividend yield of 3.7%. While HP’s revenue and earnings have declined in recent years, analysts expect a recovery in the PC market, which would benefit the company. With its solid growth potential and deep value, HP is a compelling long-term play.
2. Snowflake (NYSE: SNOW): When Snowflake, a cloud-based data warehouse services provider, went public in 2020, Berkshire Hathaway surprised many by acquiring a 2% stake in the company. This move signaled Buffett’s recognition of Snowflake’s potential in carving out a defensible niche in the data warehousing market. Despite being an unprofitable hypergrowth tech company, Snowflake has achieved remarkable revenue growth, with a compound annual growth rate (CAGR) of 98% from fiscal 2020 to fiscal 2023. The company’s innovative data aggregation and cleaning services position it well for the growing demand for data-driven decision-making. While the stock is relatively pricey, it still has room to run as the artificial intelligence market expands.
3. Amazon (NASDAQ: AMZN): Berkshire Hathaway took a stake in Amazon, the world’s largest e-commerce and cloud company, in 2019. Although Amazon’s stock has experienced little growth in recent years due to inflation and macro headwinds, the company is poised for a turnaround. Analysts anticipate a modest revenue growth of 2% in 2023, followed by a more significant 11% increase in 2024 as the company returns to profitability. With its dominance in e-commerce and cloud services, Amazon is well-positioned to take advantage of the expanding overseas marketplaces and a stabilized macro environment. While the stock may seem pricey, its rising profits will likely compress its valuation, making it an attractive long-term investment.
In conclusion, while Warren Buffett’s big-name investments often steal the spotlight, there are several underrated stocks in Berkshire Hathaway’s portfolio that should not be overlooked. HP, Snowflake, and Amazon present compelling opportunities for patient investors looking for long-term growth. These stocks offer a combination of deep value, innovative services, and market dominance, making them smart buys in the current market. As always, it is essential for investors to conduct their own research and carefully consider their investment objectives before making any decisions.
