People have found some level of success in the past by trying to emulate others who have successfully accomplished whatever task they are trying to do themselves. In the investing world, Warren Buffett has arguably been consistently successful over several decades and has shared the investing philosophy that helped make him successful.
One of the world’s wealthiest people, Buffett still plays a significant role in determining what his holding company, Berkshire Hathaway (BRK.A) (BRK.B), buys and sells. While investors shouldn’t mindlessly copy what others do because everyone has unique investing goals, Buffett’s reputation and buy-and-hold philosophy make Berkshire an excellent source for stock ideas for a broad range of investors.
Among Berkshire’s dozens of stock holdings, there are some blue-chip companies trading at great valuations for those with a long-term investment mindset. Here are four, in particular, you might want to consider as well as reasons why these Buffett stocks could selections in June.
1. Bank of America
The turbulence in the banking sector earlier this year apparently shook Berkshire’s confidence in some of its regional bank holdings; the company sold off stakes in Bank of New York Mellon and US Bancorp in the first quarter. However, Bank of America (BAC) remains one of Buffett’s largest holdings (accounting for 8.5% of Berkshire’s portfolio). Bank of America is one of the country’s largest lenders, with over $800 billion in assets.
The big bank is thriving in this higher-rate environment; net interest income is at record levels, more than $55 billion over the past four quarters. Additionally, the stock trades near its 52-week low, putting shares roughly 10% below their average price-to-book value ratio (P/B) over the past decade. A leading financial institution making record profits, and it’s on sale? That sounds like a deal.
If you’ve ever swiped a credit or debit card, you’ve probably put money into Visa‘s (V) pocket. It’s the world’s leading payment processing network, the communication line between where you swipe your card and the financial institutions that hold your money. Since more people use noncash payment methods over time, Visa has been an absolute winner, returning more than 400% over the past decade.
The stock trades at a forward price-to-earnings ratio (P/E) of 26 today, and analysts believe the company will grow earnings per share (EPS) by an average of 15% annually moving forward. Visa isn’t a massive position for Berkshire at 0.5% of its holdings, but it’s a proven winner trading at a reasonable price given its expected growth. Additionally, the company is a cash-flow machine, throwing off 58% of its revenue as free cash flow, money that finds its way to your pockets as share repurchases and dividends.
Buffett is famous for his love of dividends, something that e-commerce giant Amazon (AMZN 0.84%) doesn’t pay. Instead, Amazon offers a growth spark to Berkshire’s portfolio, despite its relatively small position size at just 0.4%. Founder Jeff Bezos once referred to Amazon as “famously unprofitable” because the company aggressively reinvests most of its profits into growth. Today, Amazon has a massive e-commerce business, a public cloud platform, and a flourishing subscriber base.
The stock might not seem cheap at first blush, especially since shares have climbed 48% since the beginning of the year. However, if you look at the stock’s operating profits, you can paint a different picture — remember, Amazon reinvests a ton into its business, which skews its bottom line. Sure, the stock isn’t as cheap as it was months back, but it’s still in the bottom half of its decade-long valuation range, signaling that there’s still juice for long-term investors here. Meanwhile, according to analyst estimates, EPS could grow more than 30% annually moving forward.
4. Paramount Global
Buffett’s earliest years were spent sifting for deep value opportunities, commonly called “cigar butts.” Media company Paramount Global (PARA -1.75%) might be a throwback to those days. Paramount, which owns several networks (including CBS), a streaming platform, and a movie studio, is caught between the past and the future. Its broadcast businesses minted profits for years, but advertising dollars and eyeballs are gradually shifting to streaming, and Paramount is losing money trying to grow its Paramount+ offering.
Paramount is trying to grab market share in the streaming industry. Its subscriber base for Paramount+ is up to approximately 60 million members. At some point, the company will begin raising prices to monetize its audience. The stock’s narrative could dramatically improve when that time comes. Analysts believe Paramount could earn $2.80 per share in 2026, which values the stock at a forward P/E of just over 5. If the company hits that number, even a rerating to just 10 times earnings would double your investment over the next few years.
Bank of America is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com, Bank of America, Berkshire Hathaway, and Visa. The Motley Fool has a disclosure policy.