I have great respect for Warren Buffett. He’s one of the great “buy-and-hold” investors of all time. The man excels at identifying undervalued, high-quality stocks that are poised to climb over the long term. The Oracle of Omaha, as Buffett is sometimes called, also frequently invests in equities that both pay significant dividends and enable investors to benefit from their price gains. As a result, he gets paid to wait for these stocks to rally. However, Buffett certainly isn’t always right. He was wrong to sell airline stocks towards the beginning of the pandemic and his oil stocks are taking a pounding lately. Having said that, I still believe that there are many, great, undervalued Warren Buffett stocks from which to choose. Here are three such names for longer-term investors to consider.
Nu Holdings (NU)
As of the end of the third quarter, Buffett owned 107 million shares of Nu Holdings (NYSE:NU), a Latin American fintech company.
Nu is growing rapidly while generating huge profits. Last quarter, it added a net total of 5.4 million new customers, and it became Brazil’s ” fourth-largest financial institution by number of customers,” according to the firm. Its average revenue per customer jumped 18% versus the same period a year earlier, while its overall top line, excluding foreign currency fluctuations, soared 53% year-over-year to $2.1 billion. Finally, its net income, excluding some items, jumped to $355.6 million from $63.1 million in Q3 of 2022.
At least two billionaires besides Buffett owned NU stock as of the end of Q3, with both Daniel Sundheim and Lee Ainslie buying sizeable amounts of the shares.
Given the company’s very rapid growth, its 25.4 forward price-earnings ratio makes it one of the most undervalued. Warren Buffett stocks.
Bank of America (BAC)
As of the end of Q3, Buffett owned 1.03 billion shares of Bank of America (NYSE:BAC) stock. The Oracle is one of the relatively few large investors who are fond of BAC, as many mutual funds are under weight the shares while a multitude of hedge funds are shorting it, Goldman Sachs reported earlier this month.
Nonetheless, after the Federal Reserve on Dec. 13 indicated that it was poised to cut interest rates three times next year, I expect BAC to have a great 2024. That’s because the bank’s shares have been in the dog house on Wall Street due to the fact that much of its balance sheet consists of bonds whose value has been pummeled as a result of interest rate increases.
But now, with the Fed turning quite dovish, rates are sinking, causing bonds’ value to surge. Furthermore, the latter phenomenon, in turn, should do wonders for BAC’s popularity on Wall Street.
Indeed, in the month that ended on Dec. 14, BAC climbed 8.5%.
Nevertheless, the shares, which have a significant dividend yield of 3%, still have an extremely low price-earnings ratio of nine.
HP (HPQ)
Buffett has cut his holdings in HP (NYSE:HPQ) stock by almost 60% in recent months. The multi-billionaire, however, still has a 5% stake in the firm that’s now worth $1.6 billion.
And for income investors and conservative investors, I view HPQ stock as a good pick at this point.
Research firm Canalys is predicting that PC sales will climb by 5% in Q4 and 8% in 2024,. That phenomenon would certainly improve HP’s financial performance. What’s more, the AI revolution is widely expected to cause PC sales to surge, as PCs with localized AI capabilities become popular.
Despite these significant, positive drivers, HPQ stock, which has a meaningful dividend yield of 3.65%, has a very low forward price-earnings ratio of 8.65 times. If you plan on investing in undervalued Warren Buffett stocks, start here.
On the date of publication, Larry Ramer did not hold (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.
