Warren Buffett's company Berkshire Hathaway (BRK.A -0.16%) (BRK.B -0.44%) recently filed its latest 13F report, showing which stocks it has a position in. And by analyzing the filing, investors can see which stocks the company has been buying and selling.
Berkshire hasn't been doing too much buying lately but there are a couple of stocks which it has dramatically increased its position in: Constellation Brands (STZ -0.81%) and Pool Corp (POOL -0.12%). Berkshire's share count in both of these stocks has more than doubled in just the past quarter. Are these stocks you should consider for your portfolio as well?
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Constellation Brands
Berkshire increased its position in beer maker Constellation Brands by 114% this past quarter, and it now owns more than 12 million shares. However, that's still modest in relation to Berkshire's overall portfolio as Constellation accounts for less than 1% of its total holdings.
Why would Berkshire be bullish on Constellation Brands right now? What Buffett may like is that it has some strong, identifiable consumer brands in Corona and Modelo, which gives the company a competitive advantage over its peers. The company has also been steadily growing its revenue over the years and its operating income has also been strong. In the trailing 12 months, Constellation's operating income totaled $3.4 billion on revenue of $10.2 billion, for an impressive margin of 33%.
What may have enticed Berkshire to add to the position was that in mid-February, the stock hit a new 52-week low, and bargain investor that Buffett is, decided to load up on the stock at the time.
Constellation Brands may look appealing but there are risks to consider as well. The company makes its beers in Mexico and tariffs pose a risk for the foreseeable future. And there are also rising health concerns around alcohol as it has been linked to an increased risk of developing several types of cancers, which could impact demand in the long run as consumers become more health conscious.
For those reasons, I wouldn't go out and buy the stock. But if you want a cheap dividend stock, Constellation could make for a compelling option as it pays 2.2%, which is better than the S&P 500 average of 1.3%.
Pool Corp
The stock that jumped the most (in terms of percentage points) in Berkshire's portfolio this past quarter was Pool Corp. Berkshire's position in that stock increased by 145%, but at around 1.5 million shares, it's a much smaller position overall for the company than Constellation. Pool Corp makes up just 0.2% of Berkshire's entire portfolio.
As its name suggests, Pool Corp is in the business of pools; it refers to itself as "the world's leading wholesale distributor of swimming pool equipment, parts and supplies, and related outdoor living products." The company has a strong global presence with sales centers in North America, Europe, and Australia.
Pool Corp's numbers are good but not as impressive as Constellation's. For one thing, the company's sales declined for the past two years, from $6.2 billion in 2022 to $5.5 billion the following year, and falling to $5.3 billion this past year. It is profitable, but its operating income of $617 million in 2024 was a more modest 12% of its top line. That's a decent margin, but it doesn't look terribly exciting.
As with Constellation Brands, Pool Corp stock has also been falling in recent months, and that may have incentivized Buffett to add the stock to Berkshire's holdings. Overall, it's a simple business to understand, it makes decent profits, and it pays a dividend of 1.7%. It's a no-nonsense stock that fits well with other consumer stocks that Berkshire has in its portfolio.
But here again, I'd pass on the stock simply because its numbers aren't all that compelling, and a time when consumers are scaling back on discretionary purchases, there may not be growing demand for swimming pools anytime soon.
