Looking for a great list of potential stocks to buy from one of the greatest investors of all time? All you have to do is check out the stocks owned by Berkshire Hathaway (BRK.A -0.42%) (BRK.B -0.20%). Warren Buffett either personally picked or approved the purchases of every stock included in Berkshire's portfolio.
But, to be honest, not all of Berkshire's stocks are attractive options right now. If you're wanting to cut right to the chase and invest only in the top stocks with a stamp of approval from the Oracle of Omaha, you've come to the right place. Here are the five best Warren Buffett stocks that you can buy right now, ranked by market cap in descending order.
Image source: The Motley Fool.
1. Apple
Buffett likes Apple (AAPL 0.28%) so much that it's Berkshire's single biggest holding. He might not be exactly enamored with Apple's valuation right now (the stock trades at 26 times expected earnings), but I think this valuation shouldn't scare investors away. Why? Apple still has tremendous growth prospects.
The company's services such as the App Store and Apple Music continue to be great growth drivers. Even more new products that should boost Apple's revenue and earnings are on the way. Apple is expected to launch two new iPhones that support high-speed 5G networks plus two new lower-cost iPhones to succeed the iPhone 11. It also reportedly plans to introduce a smaller version of its HomePod smart speaker later this year, along with Apple Tags -- new products that will enable the wireless tracking of items.
2. Amazon
Amazon.com (AMZN 0.81%) isn't one of Berkshire's larger positions. And Buffett didn't personally pick the e-commerce giant; one of his trusted investment managers did. However, Amazon has been a big winner for Berkshire so far. I suspect it will keep up its winning ways.
There are two long-term trends that clearly work in Amazon's favor. The growth of e-commerce appears to be unstoppable and is accelerating due to the COVID-19 pandemic. More companies are also moving their apps and data to the cloud, where Amazon Web Services (AWS) reigns as the market leader. Amazon is also looking for new areas to dominate, with healthcare high on the list. Don't be surprised if this $1 trillion-plus company becomes much bigger.
3. Berkshire Hathaway
The obvious Buffett stock to buy is none other than Berkshire Hathaway itself. It's without question the legendary investor's favorite stock of all. But even if Buffett didn't like Berkshire, it would be a smart pick right now.
For one thing, I think that Berkshire stock is absurdly cheap. Shares trade at just a little over book value. The stock is down more than 20% year to date and is well below the values from last year when Buffett and his lieutenants were busy buying back shares. In addition, Berkshire sits atop a massive cash stockpile. That's a lot of dry powder that Buffett will choose to deploy sooner or later to position the company for even stronger long-term growth.
4. Mastercard
Like Amazon, Mastercard (MA 1.05%) isn't one of Berkshire's largest holdings. Because of the COVID-19 outbreak, the stock hasn't performed very well so far in 2020. However, Mastercard's long-term prospects still look exceptionally strong.
I view Mastercard as one of the top stocks to buy to profit from the "war on cash." Consumers are shifting from physical forms of payment such as cash and checks to electronic forms of payment. Mastercard's payment processing network is one of only two (along with Visa's) that are critical in enabling this trend to continue. As e-commerce grows, the war on cash will only intensify. And Mastercard will be one of the biggest victors.
5. Bank of America
Aside from insurance, banking has long been one of Buffett's favorite sectors. His favorite bank stock, at least based on the relative position sizes in Berkshire's portfolio, is Bank of America (BAC 1.59%).
Not that he needs my opinion, but I think Buffett is right on track with his view of Bank of America. Sure, the company could face some challenges over the near term as the global economy contracts in the wake of the COVID-19 outbreak. However, the long term still appears to be quite bright for Bank of America. Its financial position is solid and stable.
Buffett has said in the past that you should "never bet against America." He's right. The U.S. economy will bounce back. It always does. Bank of America stock is down close to 40% below its highs from earlier this year. As the economic climate improves, I expect the stock to deliver outsized returns.
