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3 Warren Buffett stocks I’d buy now

Edward Sheldon, CFA
·4-min read
close-up photo of investor Warren Buffett
close-up photo of investor Warren Buffett

Warren Buffett is probably the greatest investor of all time. Not only has he smashed the market over the long term, but he has also built up a net worth of around $80bn.

Given Buffett’s incredible talent when it comes to picking stocks, I like to keep an eye on his investments. His portfolio can be an excellent source of investment ideas. With that in mind, here are three Warren Buffett stocks I’d buy today.

Warren Buffett is betting $90bn on this stock

One Warren Buffett stock I’m a big fan of is Apple (NASDAQ: AAPL). This is Buffett’s largest holding. It’s also one of my largest holdings. I like the company’s brand power and the ecosystem it has developed over the last decade. I also like the fact it’s making a big move into healthcare.

I haven’t always seen Apple as an automatic buy. The last time I covered the iPhone maker, in early September, I said that it was worth waiting for a better opportunity to buy because it had had an exponential run.

Today, however, I think Apple shares look quite attractive. At the moment, the shares can be picked up for just over $115, significantly lower than the $135 level they were trading at in early September. At the current price, the forward-looking P/E ratio is about 28. That’s quite reasonable, in my view, given Apple’s market dominance, high level of profitability, and long-term growth potential.

Buffett is bullish on payments

Looking at Warren Buffett’s portfolio, it’s clear he’s very bullish on the payments industry. I can understand why. Ultimately, cash is on its way out. Electronic payments are the way forward.

One Buffett stock I like in this space is Mastercard (NYSE:MA). It’s one of the major players in the credit card industry. Mastercard has a lot of classic Buffett attributes. For example, it’s an extremely profitable company. Over the last three years, return on capital employed (ROCE) has averaged more than 40%.

Mastercard shares have lagged the rest of the tech sector this year due to the fact that transactions in some areas such as travel spending have been lower due to Covid-19. I see this share price weakness as a fantastic buying opportunity. With 80% of the world’s transactions still cash-based, the long-term growth potential is huge. The current forward P/E ratio of 36 is fair, in my view.

A Buffett stock with enormous potential

Finally, a third Warren Buffett stock I’d buy now is Amazon.com (NASDAQ: AMZN). It’s also experienced a pullback recently. In early September, it was trading near $3,500. However, recently, it has been back near $3,000. I see this share price weakness as a good buying opportunity. Last week, I bought some shares myself.

There are a few reasons I’m bullish on Amazon. The first is that it’s a global leader in the online shopping space. Last quarter alone, it generated $48bn in online sales. On top of this, it generated $20bn from third-party sellers.

The second is that it’s the number one player in cloud computing. This market has massive growth potential. Between now and 2025, the industry is forecast to grow at over 20% per year.

Amazon stock is not cheap. Currently, the forward-looking P/E ratio using next year’s earnings forecast is about 68. I think this Buffett stock is worth a premium valuation though. I’d buy.

The post 3 Warren Buffett stocks I’d buy now appeared first on The Motley Fool UK.

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Edward Sheldon owns shares in Apple, Mastercard, and Amazon.com. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Apple, and Mastercard and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2020