Purchase Two Stocks Advised by Warren Buffet with Eagerness in January
In the world of investing, few figures stand out as much as Warren Buffett, the chair of Berkshire Hathaway. Known for his simple yet effective investment strategy, Buffett advocates for understanding a company's business and execution capabilities in-depth before making a sound investment decision. While easy in theory, applying this strategy in practice is quite challenging.
If you're feeling curious, here are two investment picks for 2025 based on Berkshire Hathaway's portfolio:
Bank of America
Bank of America (BAC 0.56%) is a significant player in Berkshire Hathaway's portfolio, making up almost 11.3% of the company's holdings. Despite facing numerous macroeconomic hurdles, this bank has proven to be resilient. In fact, it consistently excels in consumer banking, wealth management, global banking, and merger and acquisition activities.
Analysts have forecasted a robust performance for Bank of America in the forthcoming quarter, with revenue and earnings per share expected to reach $25.1 billion and $0.77, respectively. This translates to a healthy 14.3% growth in revenue and an impressive 133% increase in earnings.
Bank of America's net interest income (NII), a critical revenue metric, is also on an upward trajectory, expected to hit $14.3 billion by the end of 2024. The bank's success in navigating through interest rate fluctuations makes it well-positioned for continued growth in 2025.
Despite having a sizable deposit base of $940 billion, Bank of America has managed to continue growing its customer base. The bank added 360,000 net new checking accounts in Q3 2024, marking the 23rd consecutive quarter of account growth. Additionally, Bank of America has seen impressive digital adoption rates, with 75% to 95% digital usage across all lines of business.
Bank of America's shares are trading at just 1.26 times its book value, which is significantly lower compared to its 2022 peak of 1.6. Considering its solid tailwinds, the timing of Berkshire Hathaway's stock sales seems questionable. A well-considered investment in Bank of America could potentially yield lucrative returns while mitigating any potential downside risks.
American Express
American Express (AXP 0.82%) has gained traction in 2025 due to its strong premium customer base, optimal execution capabilities, and comprehensive risk management strategy. In Q3 2024, the company demonstrated resilience by delivering impressive earnings per share of $3.49 despite moderate growth in billings.
Analysts have upgraded their earnings estimates for 2024 from $13.30 to a new range of $13.75 to $14.05. Furthermore, American Express is set to target millennial and Gen Z clients, who demonstrate a strong interest in the company's products and services.
American Express has also embarked on a product refresh strategy to improve existing offerings, aiming to double the lifetime value of its younger customer base compared to older generations. This strategy proved successful, as evidenced by the U.S. Consumer Gold card becoming the top premium product among the younger demographic.
Despite its premium value, American Express stock trades at just 3 times its sales, providing an attractive investment opportunity for those seeking a reasonably valued yet promising stock.
In conclusion, Berkshire Hathaway's two most compelling picks for 2025 are Bank of America and American Express. Both stocks demonstrate strong fundamentals, substantial growth potential, and reasonable valuations. Choosing the right stock ultimately depends on an investor's risk tolerance, investment horizon, and personal beliefs regarding the market trends.
- Warren Buffett, the chair of Berkshire Hathaway, advocates for investors to understand a company's business and execution capabilities thoroughly before making investment decisions, as he believes this strategy to be simple yet effective.
- In 2025, two investment picks for those curious about Berkshire Hathaway's portfolio are Bank of America and American Express, both of which have shown robust performance and strong fundamentals.
- One of Berkshire Hathaway's top investment picks is Bank of America, which analysts predict will see a 14.3% revenue growth and an impressive 133% earnings increase during the forthcoming quarter.
- American Express has been gaining traction in 2025 due to its optimal execution capabilities, comprehensive risk management strategy, and a focus on premium customer base, making it an attractive investment opportunity for those seeking a reasonably valued yet promising stock.
