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Warren Buffett’s 11 Growth Stock Picks
Ramish Cheema
8 min read

In This Article:

In this piece, we will take a look at Warren Buffett's growth stock picks. If you want to skip our introduction to the investor and growth investing, then head on to Warren Buffett's 5 Growth Stock Picks.

Warren Buffett is one of the most successful investors of our time. His investment strategy depends on identifying firms with solid business models that are primed for growth and market capture to profit from the resulting boost to the share price. He also has one of the largest non-bank investment portfolios in the stock market, with our research suggesting that Berkshire Hathaway's portfolio by the end of this year's second quarter was worth a whopping $348 billion. The investments in the portfolio are not evenly spread out, since Berkshire's biggest stake is in the Cupertino, California consumer technology giant Apple Inc. (NASDAQ:AAPL). This stake is worth an unbelievable $177 billion and accounts for 51% of Mr. Buffett's overall holdings.

However, while he might be absolutely sure about the future prospects of Apple, a firm that also pays a 24 cent dividend for a 0.55% yield, the second quarter saw Mr. Buffett take a bullish stance on a different sector. The Federal Reserve's aggressive interest rate hikes this year have pummeled a lot of sectors, and one of the hardest hit among these has been the real estate industry. Within real estate, office companies have been hit particularly hard since not only have the high rates made it difficult for firms to raise capital and make payments on existing loans, but the trend towards remote working has also left office property owners scratching their heads. For more details, check out 15 Worst Performing REITs in 2023.

While Mr. Buffett kept away from the office real estate sector, he did buy a lot of shares in home building companies. Specifically, the June quarter saw him scoop up shares of three construction firms. These are NVR, Inc. (NYSE:NVR), Lennar Corporation (NYSE:LEN), and D.R. Horton, Inc. (NYSE:DHI). Berkshire Hathaway cumulatively invested $814 million in the companies during the quarter. Out of these, the biggest stake is in D. R. Horton, as the investment firm bought 5.9 million shares that were worth $726 million.

D. R. Horton is one of America's largest home building companies in terms of volume, and the current high rate environment that has sapped consumer budgets would lead one to believe that its shares should be down considerably year to date. However, when we look at the stock's year to date performance, we find out that D. R. Horton's shares are up by 29% year to date, in line with the 30% gains of the S&P Homebuilders Select Industry Index during the same time period. The industry has also performed well this year in terms of earnings, and the reason behind this is an interesting one that isn't often talked about. Simply put, home builders benefited from the surge in demand from the low rate coronavirus environment, and as interest rates were jacked up, there were able to significantly reduce their prices and offer buyers mortgage rates as low as 5%. This clever adaptation to the market environment has translated into strong share price gains for home buildings stocks, with investment bank Deutsche Bank penning an optimistic note for the sector in June when it shared:

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