3 Warren Buffett Stocks to Buy Hand Over Fist in April


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It may be cliché to borrow the occasional stock pick from Warren Buffett. But that doesn’t mean it’s a bad idea. He isn’t called the Oracle of Omaha for nothing, after all.

With that in mind, here are three stocks held in the portfolio of Buffett’s Berkshire Hathaway that might be good additions to yours.

Bank of America

In theory, this is a tough time to be in the banking business. The economy feels lethargic and interest rates are high, which tends to crimp demand for most banking services. Defaults and delinquencies on loans are on the rise. Investment banking activity for mergers and acquisitions and initial public offerings also is tepid. And yet Bank of America (NYSE: BAC) shares are up by nearly 50% from their October low, and just reached a new 52-week high. What gives?

To understand this stock’s strong performance during the past five months, you have to start by going back a little more than two years. That’s when investors began pricing in a worst-case economic scenario — and then some — that never actually ended up materializing. The market is simply correcting its mistake now.

The thing is, there’s still plenty more upside left to tap. BofA shares are priced inexpensively at less than 13 times this year’s projected earnings per share (EPS) of $2.91. And, with the Organisation for Economic Co-operation and Development forecasting global gross domestic product (GDP) growth of 2.9% in 2024 and the International Monetary Fund expecting 3.1% (and with both of them predicting that growth will accelerate in 2025), analysts believe Bank of America’s EPS will reach $3.18 next year.

In other words, BofA stock is undervalued because its prospects are largely being underestimated.

That’s not an unusual dynamic within the predictably cyclical banking business, of course; buying quality bank stocks during these lulls has historically proven rewarding.

Buffett, of course, knows all of this. That’s not the only reason he’s sticking with the Bank of America position Berkshire’s been holding since 2017, though — a position that’s now the conglomerate’s second-biggest stock holding, worth a whopping $38 billion. Buffett is also loving the reliable dividend payment Berkshire is collecting. New buyers of the stock will be plugging into BofA while its dividend yield is a healthy 2.6%.

BYD

It doesn’t occupy nearly as large a place in the Berkshire Hathaway portfolio as Bank of America does, but BYD (OTC: BYDD.F) is an interesting Buffett pick all the same — and increasingly so.

Never heard of it? Perhaps you have without even realizing it. This Chinese company is now the world’s biggest manufacturer of electric vehicles (EVs). Whereas Tesla shipped about 484,500 EVs in the final quarter of 2023 — a figure that slumped to 422,875 million in Q1 — BYD delivered 525,409 battery-powered cars during the last quarter of last year. This number dropped in Q1, but between BYD’s all-electric vehicles and its plug-in hybrids, the Chinese automaker actually shipped a whopping 624,398 units in the period.

These aren’t dinky EVs either. BYD’s lineup consists of full-sized sedans and reasonably sized SUVs, all of which are priced competitively with comparable Tesla models.

If you don’t recall ever seeing one of these vehicles on the road, that’s natural. BYD’s vehicles aren’t sold in the U.S., and they probably won’t be anytime soon.

It doesn’t matter. Given U.S. consumers’ relative lack of enthusiasm for electric vehicles at the moment, BYD is rightfully focusing its attention everywhere else where demand for battery-powered and plug-in hybrid automobiles is much healthier. S&P Global believes worldwide purchases of battery-powered vehicles will rise 34% to 13.3 million units this year. China and Europe are expected to continue leading this growth. Analysts with GlobalX ETFs predict that the worldwide electric vehicle market could be five times bigger by 2035 than it is now. No wonder Buffett likes BYD’s business.

That said, there’s a specific reason BYD stock is a strong buy specifically this month. That’s because of its slight pullback from last month’s high, and the fact that shares are down 40% from 2022’s peak.

Given the industrywide tailwinds for EVs, gains for BYD should be in the cards sooner or later, and likely sooner than later.

Occidental Petroleum

Last but not least, add energy producer Occidental Petroleum (NYSE: OXY) to your list of Buffett stocks to buy in April.

The company isn’t his typical cup of tea. Although he’s owned oil and natural gas stocks in the past and is also sitting on a sizable stake in Chevron, it’s a seemingly beleaguered segment that hasn’t been a key component of Berkshire’s holdings for several years.

So why are Occidental and Chevron now the fund’s fifth- and sixth-biggest stock positions? For a couple of reasons.

The first is simply that it’s becoming clear that alternative energy sources are still decades away from being the planet’s primary sources of power generation. The U.S. Energy Information Administration says renewables won’t eclipse petroleum as the world’s top sources of power production until the late 2040s, and even then, natural gas and oil combined will still meet about half of the world’s energy needs. Indeed, we’ll actually be consuming more natural gas and crude oil at that point in time than we do now.

The second reason Berkshire’s sitting on $17 billion worth of Occidental Petroleum shares is a related one, and company-specific. Occidental is arguably doing more than any other energy major to ensure it’s ready to meet these near-term and future needs.

And the situation is dire, to be sure. As Occidental Chief Executive Officer Vicki Hollub explained at the World Economic Forum in January, “In the near term, the markets are not balanced; supply, demand is not balanced… 2025 and beyond is when the world is going to be short of oil.” Underscoring this dynamic are numbers from Rystad Energy. The firm notes that as the exploration industry stands right now, only one barrel’s worth of new crude is being found for every six barrels consumed.

Given that oil prices are apt to remain high indefinitely, Occidental Petroleum is poised to remain a cash-generating machine for just as long.

Should you invest $1,000 in Bank of America right now?

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends BYD, Bank of America, Berkshire Hathaway, Chevron, S&P Global, and Tesla. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.

3 Warren Buffett Stocks to Buy Hand Over Fist in April was originally published by The Motley Fool



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