Out of the countless institutional money managers on Wall Street, none garners more attention than Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett. In the 60 years the Oracle of Omaha has held the reins at Berkshire Hathaway, he's led his company's Class A shares (BRK.A) to a cumulative return of 6,231,887%, as of the end of February 2025.
Consistently crushing Wall Street's benchmark index, the S&P 500, has encouraged some investors to mirror Buffett's trades and ride his coattails to long-term gains.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
Entering March, Warren Buffett was overseeing a 44-stock, $297.5 billion investment portfolio at Berkshire Hathaway. While a select few of these magnificent holdings stand out as screaming buys in a historically pricey stock market, a core puzzle piece of Buffett's portfolio is worth avoiding.
Warren Buffett stock No. 1 that's a screaming buy in March: Sirius XM Holdings
The first Buffett stock that makes for a surefire buy in March is the same unique stock-split stock highlighted yesterday that's trading at a historically cheap valuation: satellite-radio operator Sirius XM Holdings(NASDAQ: SIRI). Sirius XM is one of the few stocks the Oracle of Omaha has been purchasing with some degree of regularity in recent months.
Despite near-term challenges, which includes a less-than-1% year-over-year decline in self-pay subscribers in 2024, Sirius XM has an assortment of tools that make it a magnificent stock to own.
One of its most-defining characteristics is its legal monopoly status. As the only licensed satellite-radio operator, it's going to possess a level of subscription pricing power that most companies can't match. By simplifying its pricing structure, it should have no trouble reigniting in-car subscriber growth.
Another key advantage for Sirius XM is its diverse revenue stream. Most terrestrial and online radio companies generate almost all of their revenue from selling ads. This strategy works well during long-winded expansions, but it can be nerve-racking during inevitable economic contractions. Sirius XM closed out 2024 having netted 20% of its $8.7 billion in sales from advertising, with the bulk (76%) coming from self-pay subscriptions.
When economic downturns occur, subscribers are less likely to cancel their service than businesses are to notably pare back their ad spending. In other words, Sirius XM's sales are less likely to fluctuate, leading to more predictable and sustainable operating cash flow in any economic climate.
The final factor that makes Sirius XM a screaming buy, which was alluded to earlier, is its historically inexpensive valuation. At roughly 7.7 times forecast earnings per share in 2026, Sirius XM stock is valued at a nearly 50% discount to its average forward-year earnings multiple over the last half-decade.
Image source: Amazon.
Warren Buffett stock No. 2 that's a screaming buy in March: Amazon
The second magnificent Buffett stock that makes for a screaming buy in March -- and is much more of a value than investors might realize -- is Amazon(NASDAQ: AMZN). Though Amazon isn't cheap by traditional fundamental standards, traditional measures of value don't work particularly well on fast-growing companies that reinvest the bulk of their operating cash flow back into their business.
Most people are familiar with Amazon for being the world's leading e-commerce platform. Last year, eMarketer forecast Amazon's online marketplace would near 41% of U.S. e-commerce sales in 2025. While this operating segment has long been the face of the company and is responsible for a lot of Amazon's net sales, it doesn't play a particularly important role in cash-flow generation.
Amazon's growth story is all about its ancillary segments, led by Amazon Web Services. AWS is the world's leading cloud infrastructure service platform, with an estimated 33% global share of spending during the fourth quarter, per tech analysis firm Canalys. AWS is aggressively incorporating artificial intelligence (AI) solutions, including generative AI, into its platform. AWS is a considerably higher-margin segment than online retail sales, with a revenue run-rate of more than $115 billion, as of the fourth quarter.
But there's more to Amazon's high-margin cash flow expansion than just AWS. For instance, advertising service revenue has consistently grown by a double-digit percentage. Amazon averages well over 2 billion monthly global visitors and has an expansive content library, which gives the company meaningful ad-pricing power.
Likewise, subscription services revenue has also grown by a double-digit percentage. Amazon becoming the exclusive streaming partner of Thursday Night Football and select NBA games should increase the number of Prime subscribers and improve its subscription pricing power.
Lastly, Amazon is historically inexpensive, relative to its future operating cash flow. Whereas Amazon stock regularly traded at 23 to 37 times year-end cash flow throughout the 2010s, and has averaged a multiple of 21.3 times cash flow over the trailing-five-year period, shares are valued at just 12.8 times forecast cash flow per share in 2026.
The Buffett stock investors would be wise to avoid in March: Apple
But just because a stock is held in the Oracle of Omaha's $297.5 billion portfolio at Berkshire Hathaway, it doesn't automatically make it a buy. Berkshire's top holding, tech stock Apple(NASDAQ: AAPL), is the perfect example of a solid business whose stock should be off-limits.
There's little argument that Apple has done a phenomenal job of building up its brand and keeping consumers loyal to its ecosystem of products and services. For example, the iPhone continues to be the best-selling smartphone domestically.
Apple CEO Tim Cook also deserves credit for leading a multiyear effort to promote subscription services. Apple's services segment has been growing revenue by a high-single-digit to low-double-digit percentage, and should, over time, boost Apple's operating margin. As its services segment grows into a larger percentage of net sales, it'll help minimize the revenue peaks and troughs that often accompany major iPhone upgrade cycles.
But there are concerns with Berkshire Hathaway's top holding that simply can't be overlooked.
To begin with, Apple's physical product sales have disappointed for two years. Even though consumers are relatively loyal to the Apple brand, the changes the company has made to its next-generation iPhone haven't hit home with consumers. Double-digit sales growth from its services segment hasn't been enough to keep Apple's growth engine from stalling.
What makes Apple's lack of sales growth even more disturbing is that it had the benefit of historically high inflation in 2023, and revenue for its physical products still declined.
Furthermore, Apple's world's leading share repurchase program has influenced its operating results. It's bought back close to $750 billion worth of its common stock since 2013 began and has retired roughly 43% of its outstanding shares. Even with this ongoing share reduction, its earnings per share has been relatively flat over the last two years. Meanwhile, net income has dropped from $99.8 billion in fiscal 2022, to $97 billion in fiscal 2023, and finally $93.7 billion in fiscal 2024.
A company with a stalled growth engine and declining net income shouldn't be valued at 38.5 times trailing-12-month earnings, which is near a decade high.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Sean Williams has positions in Amazon and Sirius XM. The Motley Fool has positions in and recommends Amazon, Apple, and Berkshire Hathaway. The Motley Fool has a disclosure policy.
