Berkshire Hathaway CEO Warren Buffett is rightly regarded as the greatest investor of all time. Over a career spanning more than 60 years, Berkshire has crushed the S&P 500. From 1965 to 2024, it reported a compound annual gain of 19.9% vs. 10.4% for the S&P 500.
As a result, plenty of investors look to follow Buffett's lead when it comes to picking stocks, and it's easy to do so. The SEC requires Berkshire to report its stock holdings every quarter, and Berkshire generally has a fresh batch of buys and sells to report.
Many of its newest holdings hew to Buffett's value investing approach, but not all are winners. Let's take a look at two recently acquired Buffett holdings, one to buy now and one to avoid.
Image source: The Motley Fool.
The Buffett stock to buy: Lennar
Berkshire piled into homebuilder stocks following the pandemic and did well with them, and it now seems to be following a similar strategy. In fact, one of Berkshire's biggest buys in the second quarter was Lennar (LEN 1.25%), which is among the nation's largest homebuilders. Berkshire bought 7.05 million shares of the homebuilder worth nearly $780 million at the end of the quarter, and Lennar is up about 10% since then.
Lennar looks like a classic Buffett stock in a number of ways. It has a rock-solid, timeless business model -- the need for new houses isn't going to go away -- and it looks like a good value. It trades at a trailing price-to-earnings ratio of 12.7, and should benefit from several macro factors over the coming years.
First, interest rates are coming down. The Federal Reserve just cut the benchmark interest rate by 25 basis points and signaled two more cuts coming this year. That should help lower mortgage rates, making it easier for homebuyers to afford Lennar's homes.
Similarly, there is an estimated housing shortage of at least 4 million homes in the country due to years of underbuilding, so there is plenty of demand for Lennar's services. While the weakening labor market could put short-term pressure on home demand, there should be a solid growth opportunity in front of the company over the next few years, especially if mortgage rates come down.
The Buffett stock to avoid: Constellation Brands
Berkshire Hathaway began buying Constellation Brands (STZ -1.05%) in the fourth quarter of 2024 and added to its stake in Q2 2025. It now holds 13.4 million shares of the alcohol stock, which is best known as the domestic seller of Corona and Modelo.
However, the alcohol industry is facing a number of headwinds, and Constellation has been unable to escape them. The stock has fallen sharply since Berkshire first bought it, and its stake is now worth less than $2 billion.
Constellation slashed its full-year earnings guidance in early September, facing pressures including inflation, weak discretionary spending, tariffs, and a trend away from alcohol among Gen Z. It now expects adjusted earnings per share of $11.30-$11.60, down from a previous range of $12.60-$12.90, and expects beer sales to decline 2%-4%, compared to an earlier forecast of flat-to-3% growth.
The company is gaining market share, but that's little consolation to investors when organic sales and profits are declining. Most of the challenges facing Constellation seem outside of its control and are due to macroeconomics, public policy, and changing tastes. The stock might be cheap, but without a return to growth, it's likely to continue to struggle. This Buffett stock is best avoided.
