Has Warren Buffett given up on the stock market? Not entirely. Sure, the legendary investor has been a net seller of stocks for eight consecutive quarters and could extend that streak. However, Buffett is still buying at least a few stocks for Berkshire Hathaway's portfolio.
Buffett bought 10 stocks in all of 2024 (excluding buybacks of Berkshire's shares). Which is the best of the bunch for 2025?
Buffett's top 10 for last year
Several of the stocks Buffett bought last year were existing positions for Berkshire. For example, he began aggressively buying shares of property and casualty insurer Chubb(NYSE: CB) in 2023 without revealing which stock was being bought until early 2024.
Buffett added to Berkshire's already large stake in Occidental Petroleum(NYSE: OXY) in the first and second quarters of 2024. A regulatory filing also disclosed additional buying of Occidental stock by Berkshire in December. Another filing in early January disclosed that Berkshire had scooped up more shares of domain name registry service and internet infrastructure provider Verisign(NASDAQ: VRSN) at the end of 2024.
Liberty Media continued to be a favorite for Buffett last year. He bought the class A and class C shares of Liberty Media SiriusXM Holdings, tracking stocks for Liberty Media's positions in Sirius XM Holdings(NASDAQ: SIRI). He also added more shares of Sirius XM itself.
There were some new additions to Berkshire's portfolio, too. In 2024's Q2, Buffett initiated new positions in aerospace and electronics company Heico(NYSE: HEI) and cosmetics retail chain operator Ulta Beauty(NASDAQ: ULTA). In Q3, he bought shares of Domino's Pizza(NASDAQ: DPZ) and swimming pool supply company Pool Corporation(NASDAQ: POOL).
Evaluating the contenders
We can cross two of Buffett's 2024 purchases off the list for consideration. Liberty Media SiriusXM Holdings merged with Sirius XM in September.
Valuation is a major concern for another stock Buffett bought last year. Heico's shares trade at nearly 53 times forward earnings. While the company is growing sales and earnings rapidly, I'm not sure its growth justifies its premium price.
Domino's Pizza and Chubb ranked as the two biggest winners last year among the 10 stocks Buffett bought. Chubb has significant exposure to losses from the recent Los Angeles area wildfires, which could hamper its stock performance in 2025. I suspect that Domino's could keep its momentum going, though.
In his letter to Berkshire Hathaway shareholders last year, Buffett included Occidental as one of only a handful of stocks he plans to own "indefinitely." I agree with him that Oxy is a great stock to buy and hold for the long term. However, oil and gas prices could decline in 2025 with the incoming Trump administration's policies that promote increased domestic production. Because of this, I'm uncertain about how well Occidental's stock will perform over the near term.
Buffett (or one of his two investment managers) might have renewed confidence in Verisign based on the year-end purchases of the stock. I'm not as gung ho about Verisign, though: Its growth prospects in 2025 don't appear to be all that strong to me.
Wall Street thinks Pool and Ulta will deliver strong gains over the next 12 months. I won't be surprised if analysts are proven right. But I believe another stock Buffett bought last year could be poised to be an even bigger winner in 2025.
The best of the bunch for 2025
You probably noticed that I didn't mention Sirius XM in the previous evaluation of contenders. There's a simple reason why: It's my pick for the best of the bunch for 2025.
Sirius XM performed dismally last year with its shares plunging 58%. As a result, though, the stock is dirt cheap with a forward-earnings multiple of only 6.4. I suspect this attractive valuation was the main factor behind Buffett buying so much of the stock in 2024.
Income investors will almost certainly view Sirius XM as the best pick among the stocks Buffett bought last year. Its forward dividend yield stands at 5.15%, higher than the yields of any of the other nine stocks.
Granted, there's no consensus about Sirius XM's prospects on Wall Street. Only three of the 14 analysts surveyed by LSEG in January rated the stock as a "buy" or a "strong buy." Six recommended holding Sirius XM, while the others slapped "underperform" or "sell" ratings on the stock. However, the average 12-month price target for Sirius XM reflects an upside potential of almost 22%.
I'm not 100% confident that Sirius XM will be a huge winner this year. And I think other Buffett stocks (including Occidental) could be better picks over the long run. But the chances for Sirius XM to rebound look pretty good to me. I'd bet Buffett agrees.
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Keith Speights has positions in Berkshire Hathaway and Chubb. The Motley Fool has positions in and recommends Berkshire Hathaway, Domino's Pizza, Ulta Beauty, and VeriSign. The Motley Fool recommends Heico and Occidental Petroleum. The Motley Fool has a disclosure policy.
