The market is rebounding after plunging earlier this year, continuing its bull run and reaching new highs. Legendary investor Warren Buffett has made it clear many times what he thinks about bull markets: He's a contrarian investor who prefers to buy stocks when they're in bargain territory.
Although he has found stocks to buy in what seems to be an expensive market, his holding company, Berkshire Hathaway, now holds more cash than ever, mostly socked away in U.S. Treasury bills. It's also been a net seller of stocks for 10 straight quarters.
Two of his favorite stocks are my top two Buffett stocks right now. Here's why American Express (AXP +0.71%) and Bank of America (BAC +0.46%) look like good buys today.
1. American Express: New members, same great model
Buffett recently joked that he's not a fan of young companies, and American Express is an excellent example, since it's celebrating its 150th anniversary this year. This is the kind of long-term relevance and stability he loves in a stock. It's in second place in terms of how long he has held it, and his second-largest position.
The company has changed over time as its clientele and its demands have changed, and these days, it has a two-sided model of banking products and credit cards -- what's called a closed-loop system. Its highest-growth categories in terms of age are younger customers, and that should drive growth for the foreseeable future.
All of these trends, plus its focus on an affluent consumer base, have led to its formidable performance as a financial services giant. It's been keeping that up despite inflation and macroeconomic pressure.
Exclusive of a leap-year impact, revenue increased 9% year over year (currency neutral) in the 2025 first quarter, and cardmember spending was up 7%. Management expects revenue to increase 8% to 10% for the full year.
NYSE: AXP
Key Data Points
Another distinctive feature in the company's model are its annual fees. Although these aren't exclusive to American Express, and not all of its cards feature them, they are a mainstay of the model, which offers a best-in-class rewards program for its mostly fee-based credit cards.
The fees are designed to encourage spending via the rewards program, and they make up a substantial portion of the company's revenue. Fee income increased 18% year over year in the first quarter and accounted for 13% of total net revenue.
Its resilience under pressure has played a big role in its outperformance during the past year, and its gains are almost triple the S&P 500's, 30% to 11%. It also pays a dividend that yields 1% at the current price. American Express is an excellent choice for a stock that offers value with a growing dividend and reliability over time.
2. Bank of America: The classic bank stock
Bank of America, or BofA, is the second-largest bank by assets in the U.S. Buffett doesn't usually mention it by name, but there are traits he often talks about that fit BofA's model.
It's a large bank that helps drive the economy, it's specifically consumer-focused, and it has excellent management that has steered it through challenging times. As a stock, it's cheaper than similar bank stocks, and it pays an attractive dividend. Bank of America is Berkshire Hathaway's third-largest position after getting bumped down from the second spot when Buffett sold some shares last year.
Although the consumer focus remains its core segment, BofA has had success in its institutional business, and it demonstrated strength while interest rates soared. It's in even better shape now that interest rates are coming down.
NYSE: BAC
Key Data Points
In the first quarter, revenue increased 6% to $27.4 billion, and earnings per share (EPS) increased 18% to $0.90. It added 250,000 new checking accounts, the 25th straight quarter of growth, and 1 million credit card accounts.
It has a strong digital program that's attracting new business even though it's already a banking giant. Deposits increased for the seventh consecutive quarter, since a low in 2023, to nearly $2 trillion.
On the global banking side, it maintained its third place in investment banking and deposits increased 12% from last year.
As for the stock, it trades at a price-to-book ratio of 1.3, which is cheaper than similar banks, and its dividend yields 2.2% at the current price. Bank of America is a strong value candidate that's still growing, and it offers stability and reliability for a diversified portfolio.
