The Oracle of Omaha, Warren Buffett is one of the most successful investors of our time. So, it just makes sense to track some of the best Buffett stocks to buy. In addition, his company Berkshire Hathaway (NYSE:BRK-B) holds a well-diversified portfolio of stocks, many of which are often hand-picked by Warren Buffett himself. After all, Buffett is known for investing in quality companies with strong brands, good management, and solid financials.
In this article, we will take a look at the three undervalued stocks in Berkshire Hathaway’s portfolio, as listed in the company’s most recent 13F filing with the U.S. SEC. These undervalued Buffett stocks offer a glimpse into the types of companies that interest Buffett.
| AAPL | Apple | $145.43 |
| STNE | StoneCo | $11.35 |
| SNOW | Snowflake | $165.22 |
Buffett Stocks to Buy: Apple (AAPL)
Apple (NASDAQ:AAPL) is a no-brainer, as it is the largest holding of Berkshire Hathaway and a well-established company with a proven track record of success and a promising future. Berkshire has massive exposure to this stock, with 38.3% of its portfolio allocated to AAPL. This shows that Buffett is confident in Apple’s ability to continue delivering solid results and is willing to bet big on the stock.
For investors looking for a blue-chip stock with a growth history, Apple is definitely worth considering. The technology giant has consistently outperformed the market despite short-term hiccups and is currently one of the largest companies in the world by market capitalization. Its product lineup and closed-loop system, including products such as the iPhone, iPad, Mac, and Apple Watch, has helped it establish a loyal customer base and strong brand recognition.
The company also generates much of its revenue from wealthier customers, less affected by inflationary pressures. This is why Apple’s top line grew at an 8.14% clip, and its profits grew despite margins declining by 6.73%.
Buffett Stocks to Buy: StoneCo (STNE)
While I could put big-name companies such as Bank of America (NYSE:BAC), Occidental Petroleum (NYSE:OXY), or Coca-Cola (NYSE:KO) on this list, each is far from undervalued. The stock that does fit the undervalued theme is StoneCo (NASDAQ:STNE), a Brazilian financial technology company offering digital solutions to small and medium-sized businesses, making it easier for them to manage their financials, receive payments, and run their operations. The company’s success can be attributed to its focus on serving the underserved and emerging market in Brazil, which traditional financial institutions have largely ignored.
The company is among the fastest growing in the fintech sphere, with its revenue growing 70% year-on-year last quarter and profits growing at 94%. Even more impressively, its profit margin more than doubled from the past-year period in Q3 2022, beating most expectations. These metrics have slowed, but STNE stock is still trading nearly 90% down from its peak. Therefore, I find it highly oversold in this range. Considering the long-term prospects, STNE provides an excellent entry point, and I’m confident it will surge as stabilizing exchange rates improve these metrics even more.
Snowflake (SNOW)
Almost all technology companies with a cloud segment are reporting a boom. Companies like Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and IBM (NYSE:IBM) are seeing their cloud segment not only outgrowing other segments but becoming their primary growth driver. This may look like excellent news for a cloud-computing pure-play like Snowflake (NYSE:SNOW). But unfortunately, the stock is down 60% from its high.
Of course, the Street has justifiable reasons for being bearish on the stock for the past year. However, the perspective of SNOW stock is slowly shifting, and the stock is gearing up for a recovery. Snowflake’s growth is decelerating, but its financials are consistently improving and beating expectations. If the same trend persists, the company will likely narrow its losses significantly within a few quarters. That should compel a much higher premium.
On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Blue-Chip Stocks, Undervalued Stocks
