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As September begins, a month known for being tough on stocks, it's a good time to look at "Warren Buffett stocks," which are the investments held by Berkshire Hathaway (NYSE:BRKb), the company led by the Oracle of Omaha.
Buffett's stock picks, guided by his long-term value investment strategy, usually hold up better than average during market downturns and panics. Additionally, if these stocks drop significantly, it might be a smart move to buy them in anticipation of a potentially more positive fourth quarter.
So, we decided to examine Warren Buffett's portfolio. We started by using InvestingPro's "Ideas" section, which allows you to easily add Buffett's portfolio to a Watchlist Pro with just one click.
Next, we set up the Watchlist to show the following details:
First, we aimed to find Warren Buffett's stocks with the most potential according to InvestingPro Fair Value. We identified 8 stocks that have an upside potential of over 15%.
Note: InvestingPro Fair Value provides an intelligent average of several well-known valuation models for each stock, helping us determine how much a stock might rise or fall compared to its fundamental value. Meanwhile, the health score evaluates a company's financial health by looking at various financial metrics and comparing them with similar companies.
Specifically, these stocks have an upside potential ranging from 16.8% to 26.1% according to InvestingPro Fair Value. Among them, Lennar (NYSE:LEN) stands out as the only stock with an above-average financial health score of 2.77 out of 5.
In the past month, Lennar experienced a strong 12.9% increase, though UnitedHealth, another Buffett stock, outperformed with a 27.8% gain.
Additionally, two stocks from the list show considerable upside according to analysts: Constellation Brands (NYSE:STZ) with a 22.9% potential and Charter Communications (NASDAQ:CHTR) with a 55.4% potential.
Some of Buffett's stocks seem promising now, and they might become even more attractive if September's usual market downturn creates opportunities.
Alternatively, another approach to finding the best stocks in Buffett's portfolio is by using artificial intelligence.
Every three months, the ProPicks AI strategy, "Best of Buffett," available to InvestingPro subscribers, selects the 15 best stocks from the legendary investor's portfolio.
The latest update was released on September 1, providing subscribers with a fresh list of opportunities to explore this fall.
The "Best of Buffett" strategy has a low-risk profile featuring a Sharpe ratio of 0.87 and a 12-year return of about 460%, which is 330% higher than the S&P 500 over the same period.
There are over 30 thematic and regional strategies available, with plans for even more in the future. These strategies cover US, European, and emerging markets, each with compelling performance records.
Unlike the "Best of Buffett" strategy, which is updated quarterly, the other ProPicks AI strategies are re-evaluated monthly, on the 1st of each month.
Finally, it's important to note that the features mentioned in this article are just a few of the many tools InvestingPro offers for market success. InvestingPro provides a comprehensive range of tools to help investors react to market conditions effectively, including:
These tools are designed to help investors outperform the market every day.