Warren Buffett is known to most of us for his amazing investing record. He has increased the value of his company, Berkshire Hathaway, by an annual average of nearly 20% over close to 60 years!
So it's not surprising that many people look to see what stocks his company is buying or selling -- or simply holding. Here, then, are five companies that Berkshire owns part of, via shares of stock, that you might consider buying for your own portfolio.
Image source: The Motley Fool.
Note that in this uncertain economy, with threats of tariffs and a potential recession looming, you may be understandably reluctant to buy any stocks right now. If so, you might still learn more about these businesses and perhaps add some to your watch list, waiting for a better time -- or price.
1. Ally Financial
Ally Financial (ALLY +2.07%) is America's largest indirect car loan company. Direct lenders are owned by automakers themselves -- and Ally, formerly known as GMAC, was spun off from General Motors in 2006.
Today, with a recent market value of $9.7 billion, it's a top online bank in the U.S. (among the top 25 financial holding companies in the U.S.), now offering banking, insurance, and investment services and more. It recently had around 11 million customers.
NYSE: ALLY
Key Data Points
One thing Buffett might like about Ally is its dividend, which recently yielded 3.7%. Its valuation is reasonable or even attractive, too, with a recent price-to-sales ratio of 1.1, below its five-year average of 1.3. The company is growing, too: In its recent first-quarter report, Ally said it had a record 3.8 million consumer auto loan applications, and insurance written premiums up 9% year over year.
2. Kroger
Founded in 1883, Kroger (KR 0.44%) is a grocery giant, employing more than 400,000 people over 2,000 locations serving more than 63 million households annually.
In its last annual report, it said it had 2,731 supermarkets -- 2,273 of which had pharmacies and more than 1,700 with fuel centers. About 51% of these are in company-owned buildings. Subsidiaries include Dillon's, King Soopers, Fred Meyer, Harris Teeter, Ralph's, Roundy's, Shop-Rite, and Smith's, among many others.
NYSE: KR
Key Data Points
Kroger should be a good stock to own if you're worried about a recession, since it's a defensive business, meaning it sells groceries, drugs, fuel, and more, which are things people can't really do without when the market heads south.
Its dividend yield was recently 1.8%, and it's one of the top two supermarkets in most of the regions in which it operates. You might think of grocery stores as snoozers, investment-wise, but over the past 15 years, Kroger has averaged annual gains of 13.6%.
It's true that its net profit margin is low -- recently below 2% -- but it makes up for that with a lot of volume. The main caveat here is that the stock isn't exactly bargain-priced, with a recent forward-looking price-to-earnings ratio (P/E) of 15, above the five-year average of 12.
3. Bank of America
While Kroger is a small Berkshire holding, Bank of America (BAC 0.03%) is a big one, making up about 11% of the portfolio. Indeed, Berkshire owns about 9% of the bank. It generates a lot of dividend income for Buffett, with its recent yield of 2.8%.
It is a well-diversified banking giant, operating in consumer banking, global wealth and investment management, global banking, and global markets. First-quarter results were solid, extending the bank's record to 12 consecutive quarters of revenue growth -- and earnings per share exceeded expectations. Its stock is appealingly valued, too, with a recent forward P/E of 10.2, below the five-year average of 11.4.
4. Sirius XM Holdings
Sirius XM Holdings (SIRI +6.83%) is a major audio entertainment provider, largely via satellite, spanning the SiriusXM and Pandora platforms. It has around 160 million listeners each month.
The stock has stumbled lately, and the company is in the midst of turning itself around. That's not a sure thing, but it has presented a lower stock price, recently featuring a forward P/E of 6.6, well below the five-year average of 14.6.
NASDAQ: SIRI
Key Data Points
Read up on the company before investing in it, to ensure that you're bullish on its prospects. Buffett (and/or his lieutenants) have done that -- Berkshire recently owned more than a third of Sirius XM. It's a dividend payer, too, recently yielding 5.3%.
5. Chevron
Chevron (CVX 0.40%) recently had a market value of nearly $240 billion and is another dividend payer, with a recent 5% yield. It's also been a big stock repurchaser, which has also rewarded shareholders. The company is a standout dividend payer, having increased its payout for 38 years in a row, and it's financially strong, too, with a robust balance sheet.
Oil prices have been relatively low lately, putting pressure on profits, but that may not last forever. If you're a long-term believer in Chevron and buy now, you can enjoy that 5% yield while you wait. The forward P/E was recently 14.6, a bit above its five-year average of 13.6, suggesting it's slightly overvalued or roughly fairly valued.
Dig deeper into any of these companies that interest you to see if they deserve a position in your portfolio.
