Warren Buffet Is Buying These 3 Stocks Right Now

Sometimes finding fresh investing inspiration can be a challenge, but if you examine billionaire Warren Buffett’s moves, you can find insights from one of the world’s most successful fund managers.

Buffett is many things — a high profile proponent of value investing, a legendary philanthropist and owner of over 60 companies. Now, the “Oracle of Omaha” as he is known, has revealed the fourth-quarter trades of his $191 billion Berkshire Hathaway Inc fund.

The result: a valuable glimpse into which stocks Buffett likes, and which he doesn’t. Bear in mind that the 13F forms filed with the U.S. Securities and Exchange Commission reveal trades made in the last quarter rather than the current quarter, so it is possible that the fund’s positions have since changed. Nonetheless, his moves are still carefully tracked by investors around the world.

Here we also include TipRanks’ stock insights from Wall Street’s best-performing analysts. Does the Street sentiment match Buffett’s latest trades? We look at the outlook on these stocks from the best-performing analysts on Wall Street. These are the analysts that consistently outperform the market with the highest success rate and average return.

Let’s delve in now:

1 Apple (NASDAQ:AAPL)

Apple shares spiked higher on the news that AAPL is now Buffett’s largest investment. Following a 23% increase of AAPL shares, Buffett now holds $28 billion of AAPL stock. This is about 14.6% of the total portfolio. According to Time, Buffett explained that: “Apple strikes me as having quite a sticky product and an enormously useful product to people that use it, not that I do.”

And Morgan Stanley’s Kathryn Huberty also echoes Buffett’s bullish Apple stance. After examining China’s smartphone stats, she reiterates her buy rating with a $203 price target (18% upside potential). Despite tough competition from local Chinese brands, she believes that “a rising retention rate and a switching rate above peers shows that Apple platform share gains can still accelerate as the market matures.”

“With over 1⁄3 of the Apple installed base in China still owning an iPhone 6 or older model compared to 20% that owned an iPhone 5S or older a year ago, there remains significant untapped potential for continued upgrades/share gains.”

Overall, we can see from TipRanks that analysts are cautiously optimistic on AAPL right now. With an average price target of $193, the Street is predicting AAPL can soar 12% from current prices in the coming months. You can click on the screenshot below for a more in-depth coverage of AAPL stock.

2 BNY Mellon (NYSE:BK)

Buffett has now ramped up his holding of this financial stock by 21% to $3.275 billion. This makes BNY Mellon the 10th biggest stock in Berkshire’s portfolio. Although Buffett has held BK since 2010, he began to pour money into the stock in 2017 with two 50% increases.

From a Street perspective, analysts are divided on BK’s outlook. We can see that BK has a Moderate Buy analyst consensus rating with a recent stock upgrade (from Morgan Stanley) and a downgrade (JP Morgan).

Somewhere in the middle we have one of TipRanks’ Top 10 analysts, Vining Sparks’ Marty Mosby. He maintains his Hold rating on BK with a $60 price target (7% upside potential).

He sees growth ahead but adds a note of caution: “Looking into 2018E, we believe that BK is still positioned to generate another year of double-digit growth in earnings per share, as its tax rate is reduced and share count continues to be managed lower; however, we believe most of this upcoming benefit is currently priced into BK’s current valuation.”

3 Teva (NYSE:TEVA)

Buffett surprised the market with a big bet on flailing pharma giant Teva. He snapped up 19 million shares in TEVA, worth about $358 million. On the news Teva shares climbed over 10%.

There is no doubt that this is a risky move. Teva is currently one of the most-shorted stocks on the market and has just begun a restructuring program to deal with its massive $35 billion debt burden. However, given that shares are trading at just $21 vs the 5-year peak of over $70, perhaps this will turn out to be a bargain buy for the Oracle of Omaha. And as Buffett famously says: When others are fearful, be greedy.

TipRanks shows TEVA has a Hold analyst consensus rating- with an average analyst price target that suggests 7% downside from the current share price.

However, five-star Mizuho analyst Irina Rivkind Koffler calls the stock a Buy. She sees the stock leaping by 10% to $23 in the coming months and says: “We expect slow but gradual appreciation in TEVA shares. While the 2018 outlook introduced on the 4Q:17 call came in below expectations, we believe there is downside protection, and even longer-term upside to the stock.”

And 3 stocks Buffett is selling:

The Oracle of Omaha indicated a bearish attitude towards the following three stocks in Q4: IBM (NYSE:IBM); General Motors (NYSE:GM); and Sanofi (NYSE:SNY). Indeed, he nearly exited tech giant IBM completely with the sale of a whopping 35 million shares (about 94% of his holding). Back in May 2017 (at which point he had apparently lost $800 million on IBM according to Business Insider) Buffett reflected that:

“I don’t value IBM the same way that I did 6 years ago when I started buying… I’ve revalued it somewhat downward… I think if you look back at what they were projecting and how they thought the business would develop I would say what they’ve run into is some pretty tough competitors… IBM is a big strong company, but they’ve got big strong competitors too.” 

Overall IBM has a Moderate Buy analyst consensus rating on TipRanks. Top Cantor Fitzgerald analyst Joseph Foresi notes that the stock has underperformed the market year-to-date and says: “we view a stabilization of the core business and subsequent return to growth as necessary for multiple expansion.” He recently reiterated his Hold rating and lowered his price target from $154 to $152 (vs the current share price of $156).

Disclaimer: TipRanks is an independent cloud based service that measures and ranks digitally published financial advice. TipRanks' natural language processing (NLP) algorithms aggregate and ...

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