Warren Buffett is winning so far in 2023. Shares of his Berkshire Hathaway (BRK.A 0.01%) (BRK.B 0.31%) are up by a double-digit percentage. Analysts are optimistic about the stock's prospects, too. The consensus 12-month price target reflects an upside potential of 19%.
However, if you're looking for even more impressive opportunities, check out some of the individual stocks in Berkshire's portfolio. Here are three Buffett stocks that could soar 31% to 59% over the next 12 months, according to Wall Street.
1. Amazon
There are plenty of Amazon (AMZN 1.03%) bulls on Wall Street. Of the 47 analysts surveyed by Refinitiv in October, 43 rate the stock as a buy or a strong buy. The average 12-month price target for Amazon is 31% higher than its current share price.
NASDAQ: AMZN
Key Data Points
But Amazon stock has already soared more than 50% so far this year. Can it really keep the momentum going? I think the answer is a resounding yes.
The company has delivered strong earnings and free-cash-flow growth in recent quarters. I expect this trend will continue into 2024, thanks to Amazon's streamlining initiatives. The inclusion of advertising on Prime Video beginning next year should also help fund new content. This, in turn, should attract more subscribers to Amazon Prime.
A recession or significant economic slowdown could prevent Amazon from reaching Wall Street's price target. For now, though, many economists have pulled back on earlier predictions of a near-term recession. If this relative optimism proves to be warranted, Amazon should have a good chance of adding further to its nice gains.
2. D.R. Horton
Buffett invested in several homebuilders in the second quarter of 2023. His favorite of the bunch, though, seems to be D.R. Horton (DHI +1.07%). Analysts think highly of the stock, too. The consensus 12-month price target reflects an upside potential of 32%.
NYSE: DHI
Key Data Points
What do Buffett and analysts like about D.R. Horton? It's been the biggest homebuilder in the U.S. for more than 20 years. Even with a solid year-to-date gain of over 20%, the stock remains attractively valued, with shares trading at a forward earnings multiple of only 8.2x.
They also understand that the U.S. continues to experience a housing shortage. The only way to address the issue is to build more houses, and D.R. Horton is doing just that. The company expects to close around 83,000 homes, plus nearly 7,000 rental homes/units, in 2023.
Should interest rates move significantly higher, D.R. Horton might not be able to hit Wall Street's price target. However, some top economists think that the Federal Reserve won't raise rates much more and could begin to lower rates somewhat next year.
3. General Motors
It's probably fair to say that Buffett doesn't like General Motors (GM 0.90%) as much as he has in the past. In Q2, the Oracle of Omaha slashed Berkshire Hathaway's position in the automaker by 45%.
NYSE: GM
Key Data Points
Wall Street analysts have mixed opinions about GM, as well. Of the 24 analysts surveyed by Refinitiv in October, only nine rate the stock as a buy or strong buy. Two analysts think that GM will underperform the market.
But the average price target for the stock is still 59% above GM's current share price. Why? GM is dirt cheap, with shares trading at only 4.6x expected earnings.
The company's revenue jumped 18% year over year in Q2, with adjusted earnings per share vaulting nearly 28% higher. GM also raised its full-year 2023 guidance.
Higher interest rates and the possibility of a recession could be obstacles that keep GM from rebounding. On the other hand, GM has growth opportunities with its electric vehicles and its 80% stake in autonomous vehicle leader Cruise.
I think that Amazon and D.R. Horton are better bets than GM is right now. However, a few positive developments just might spark a huge surge for the beaten-down auto stock over the next 12 months.
