Warren Buffett stocks to buy and hold is our topic for today. Each quarter, Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), led by Buffett, releases current holdings as well as most recent transactions. Wall Street pays close attention to what the “Oracle of Omaha” buys and sells.
Amid this year’s bear market, red-hot inflation, increasing rates and geopolitical concerns, Buffett’s holdings become even more important for retail investors, many of whom invest in BRK-B stock in long-term portfolios. Berkshire Hathaway shares have lost around 4% since January. In comparison, the S&P 500 index has declined close to 17%.
Many InvestorPlace.com access Berkshire Hathaway’s 13F filings with the U.S. Securities and Exchange Commission (SEC) online. At the end of Q1, its portfolio value was around $363 billion. We should also note that the largest holding in Buffett’s stocks includes Apple (NASDAQ:AAPL), comprising close to 43% of the portfolio.
With that information, here are seven Warren Buffett stocks to buy and hold in the third quarter:
|BAC||Bank of America||$33.26|
|MMC||Marsh & McLennan||$161.43|
Ally Financial (ALLY)
52-week range: $31.66 – $56.28
Ally Financial (NYSE:ALLY) provides financial services, including car finance, online banking, corporate lending, vehicle insurance, mortgage loans. It also offers an electronic trading platform for investors. As of the end of Q1, Warren Buffett, a big fan of financial companies, owned close to 9 million shares of ALLY.
The financial services company put out Q2 results on July 19. Adjusted total net revenue increased 4% to $2.22 billion from $2.15 billion in the prior-year quarter. Adjusted earnings per share (EPS) declined 24% year-over-year (YOY) to $1.76.
Ally Invest, the online brokerage and wealth management arm of Ally Financial, announced the launch of its Wealth Management advisory service, available for a minimum of $100,000 in investable assets. With the new offering, ALLY targets over 15 million U.S. households who do not meet the minimum $250,000 criteria required by most financial institutions.
ALLY stock has dropped 32% year-to-date (YTD), trading near 52-week lows set on June 17. Yet, the price supports a generous 3.58% dividend yield.
Shares are trading at a bargain 4.4 times forward earnings and 1.3 times book value. Meanwhile, analysts’ 12-month median price forecast stands at $42.50.
American Express (AXP)
52-week range: $134.12 – $199.55
American Express (NYSE:AXP) is a globally integrated payments company, serving both consumers and businesses. Within the U.S. credit card market, American Express has the third spot behind Visa (NYSE:V) and Mastercard (NYSE:MA). Around 7.5% of Buffett’s portfolio is in AXP stock.
The payments giant issued Q2 metrics on July 22. Revenue surged 31% YOY to $13.4 billion. However, diluted EPS declined 8% to $2.57 compared to $2.80 in the year-ago quarter.
Recently, American Express and Marriott Bonvoy, Marriott International’s (NASDAQ:MAR) travel program, unveiled changes to the small business card offering with renewed travel, business, and global dining rewards. Following months of Covid-19 lockdowns, it is an example of numerous steps American Express and its travel partners are taking to boost top line growth.
So far in 2022, AXP stock has declined almost 9%, while the current price supports a dividend yield of 1.36%. Shares are trading at 16.1 times forward earnings and 5 times book value. Wall Street’s 12-month median price forecast is at $175.
Bank of America (BAC)
52-week range: $29.67 – $50.11
Bank of America (NYSE:BAC) is one of the largest financial institutions stateside, comprising about 13.6% of Buffett’s portfolio. By asset size, it has the second spot behind JPMorgan Chase (NYSE:JPM).
The banking giant released Q2 results on July 18. Revenue increased 6% YOY to $22.7 billion. Diluted EPS was 73 cents compared to $1.03 in the last year quarter.
Net interest income grew 22% YOY to $12.4 billion, driven by higher interest rates, lower premium amortization, and loan growth.
In mid-June, the financial giant announced that its Virtual Account Management (VAM) solution will be available to U.S. companies. They can now open virtual accounts that act as sub-ledger accounts tied to a physical account. Investors will be keen to see the results of bank’s steps to increase its reach at business customers.
BAC stock has lost 27% YTD while supporting a dividend yield of 2.62%. Shares are trading at 10.53 times forward earnings and 1.12 times book value. Meanwhile, analysts’ 12-month median price forecast stands at $42.
52-week range: $26.11 – $41.47
HP (NYSE:HPQ) is one of the leading computer hardware manufacturers worldwide. The tech giant is known for its personal computers (PC), printers, and mobile devices.
Management reported Q2 numbers on May 31. Net revenue increased 3.9% YOY to $16.5 billion. Diluted net EPS jumped 16% YOY to $1.08, which came in at the high end of previous guidance. Free cash flow (FCF) was $400 million.
In terms of individual segments, revenue from personal systems increased 9%, while revenue from the printing business declined 7% YOY. Although the overall revenue was up, HP lost some of its relatively more profitable printing revenue. Still, management raised the EPS outlook for FY22.
So far in 2022, HPQ stock has fallen more than 14%, yet the current price supports a dividend yield of 3.07%. Shares are trading at 7.8 times forward earnings and 0.6 times sales. Wall Street’s 12-month median price forecast is at $36.
52-week range: $38.22 – $62.78
Kroger released Q1 results in mid-June. Total revenue was $44.6 billion, compared to $41.3 billion for the same period last year. Excluding fuel, identical sales increased 4.1% YOY. Adjusted EPS came in at $1.45 compared to $1.19 last year.
The retailer announced the launch of Boost by Kroger, the latest expansion of its loyalty program. The annual membership provides customers unlimited free grocery delivery on orders of $35 or more and fuel discounts of up to $1 per gallon.
Management estimates this membership can save customers more than $1,000 per year on fuel and grocery delivery. Meanwhile, Wall Street will be paying close attention to how the loyalty program can help Kroger’s top line.
KR stock has gained 1% since the beginning of the year. The current price supports a dividend yield of 2.25%. Shares are trading at an attractive 11.8 times forward earnings and 0.2 times sales. Meanwhile, analysts’ 12-month median price forecast stands at $54.
Marsh & McLennan (MMC)
52-week range: $142.80 – $183.14
The insurance and consulting giant put out Q2 results on July 21. Consolidated revenue was $5.4 billion, up 7% YOY. Adjusted EPS rose 8% to $1.89 per diluted share compared with $1.75 a year ago.
MMC acquired two independent insurance agencies in Maine and Chicago in the summer, indicating dedication to continuous growth. According to a recent study by the Swiss RE Institute, global insurance premiums will rise to $4.3 trillion by 2040 with a compound annual growth rate (CAGR) of 4.3%. Marsh & McLennan is likely to benefit from this expansion.
MMC stock has declined 6% YTD but has gained 7% over the past 12 months. The current price level supports a dividend yield of 1.50%. Shares are trading at 23.5 times forward earnings and 3.9 times sales. Wall Street’s 12-month median price forecast is at $179.
US Bancorp (USB)
52-week range: $43.74 – $63.57
The bank put out Q2 results in mid-July. Revenue came in at $6.01 billion. Diluted EPS was 99 cents compared to $1.28 in the year-ago quarter. $3.46 billion of revenue was derived from net interest income (NII), while $2.55 billion came from noninterest income.
Effective June 16, US Bancorp increased its prime lending rate to 4.75 percent from 4.00 percent, in line with the ongoing interest rate hikes by Federal Reserve. Investors expect the top line to benefit from this increase.
USB stock has lost 18% YTD, yet the current price supports a dividend yield of a robust 3.82%. Shares are trading at 11 times forward earnings and 1.7 times book value. Finally, analysts’ 12-month median price forecast stands at $54.
On the date of publication, Tezcan Gecgil, Ph.D., 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.