Buffett’s Bargains: 3 Berkshire Stocks to Buy While They Are Still Cheap

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  • Berkshire Hathaway is a great starting place for new investors seeking businesses to stash on their radars.
  • American Express (AXP): The latest quarter helped propel shares to new highs. 
  • Apple (AAPL): Don’t discount the value of the fast-growing services segment.
  • Snowflake (SNOW): It’s a tiny holding in the Berkshire basket, but one that’s full of growth potential in the AI age.
Berkshire Hathaway picks - Buffett’s Bargains: 3 Berkshire Stocks to Buy While They Are Still Cheap

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Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) is worth keeping tabs on if you’re a relatively new value investor who’s still learning the ropes in the investing world. Indeed, the Berkshire Hathaway portfolio is full of what Buffett would label a “wonderful company.” There are major (or even minor) holdings in the portfolio. But that doesn’t mean you should be a net buyer of any individual holdings. After all, the price you pay will differ from the price Berkshire paid.

Indeed, with the Berkshire portfolio, we’ve got the “wonderful” factor down. But what about pricing? After a hot January, prices are getting a tad rich, depending on where you look. Still, I view compelling value within the Berkshire portfolio right here.

Though you may not land the same cost basis as Buffet, the Berkshire portfolio as an excellent guide for beginners. And right now, the following three are among the most intriguing as we move into February.

American Express (AXP)

an American Express (AXP) credit card sticking out of someone's pocket
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American Express (NYSE:AXP) is one of the long-time holdings of the legendary Berkshire Hathaway portfolio. There’s a slim chance of scoring a cost basis anywhere close to what Berkshire paid. I view shares as reasonably priced compared to what you’re getting. American Express isn’t just a wonderful company. It’s one that’s become more wonderful with time. The company’s latest quarter sent AXP stock skyrocketing, up more than 7% in a day as investors digested the results.

And, the results weren’t just good. They were incredibly impressive, with traction gaining with younger consumers (think Millennials and even Zoomers). Indeed, this isn’t the first quarter that saw young people in the growth driver’s seat. And it probably won’t be the last as American Express does its best to cater to the younger generations, which only stand to become wealthier over the years and decades.

Young people are loving the Platinum and Gold cards, the flexible Amex points, and the travel-focused nature of the American Express ecosystem. In many ways, American Express is the ultimate credit card stock to own right now. And, it’s perhaps the most intriguing of the Berkshire batch while it’s going for just 18.2 times trailing price-to-earnings.

Apple (AAPL)

Newly released iPhone 15 pro max mockup set with back and front angles. AAPL stock
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Apple (NASDAQ:AAPL) is the largest holding of the Berkshire portfolio. It stands to comprise a larger slice of the pie over time as the company continues buying back shares while growing earnings steadily over time.

Undoubtedly, iPhone sales are bound to be lumpy over the medium term, with some years’ models shining brighter than others. You could argue that the latest iPhone 15 model isn’t all too different from last year’s. This is a common complaint of smartphone users these days. Still, if you’re a long-term investor like Buffett, the year-over-year (YOY) lumpiness of hardware sales growth ought to be forgiven.

At the end of the day, the services segment continues growing. And, it’s making the overall revenue growth mix somewhat look less lumpy over time.

Further, the world economy isn’t exactly in an ideal place right now. In the U.S. and Canada, consumers face headwinds that could keep hurting their ability to upgrade to the latest tech. And in China, things couldn’t be more bleak, with the economy in dire need of some sort of relief.

As the world economy recovers in time, we could see iPhone sales pick up again, all while services continue trending higher. Who knows? Perhaps an artificial intelligence service could help really take services to the next level!

Either way, I believe Apple stock remains one of the finest holdings in Berkshire’s portfolio, even at close to $190 per share.

Snowflake (SNOW)

The Snowflake logo on a company office in Silicon Valley, California. (SNOW IPO)
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Snowflake (NASDAQ:SNOW) represents a snowflake-sized portion of the Berkshire portfolio. But it’s still a high-tech innovator worth keeping on a watchlist.

As a hyper-growth company with a booming cloud data business, Snowflake is unlike any other holding in Berkshire’s portfolio. Indeed, it’s a stark deviation from the typical Berkshire and Buffett playbook. However, I do view the holding as one that could grow in the future as Buffett’s successors gain more influence over the Berkshire portfolio.

At $206 and change per share, Snowflake stock is looking lofty again, even for the most seasoned of growth investors. At over 26 times price-to-sales (P/S), SNOW seems too expensive to consider.

Even still, the company has a lot to win as the AI revolution continues to unfold. As one of the most intriguing data infrastructure plays out, investors should be willing to give the name a second look after its recent 9.1% year-to-date (YTD) surge.

On the date of publication, Joey Frenette owned shares of Apple, American Express, Berkshire Hathaway, and Snowflake. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.


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