In This Article:
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(1:00) - Can Value Investors Gain Exposure Into The Magnificent 7?
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(5:45) - Tracey’s Top Picks To Keep On Your Radar
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(26:00) - Episode Roundup: BRK.B, GOOGL, SHW, MAS, AWI
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Podcast@Zacks.com
Welcome to Episode #367 of the Value Investor Podcast.
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio, shares some of her top value investing tips and stock picks.
Recently, Tracey looked at the top 10 holdings in the S&P 500 index ETFs for a podcast she was doing with Zacks Director of ETF Research, Neena Mishra. When Tesla’s stock was surging, the top 7 were what became known as the Magnificent 7: Microsoft, Apple, NVIDIA, Amazon, Meta Platforms, Alphabet and Tesla.
But Tesla’s stock plunged 50% this year and that moved it out of not only the top 7, but the top 10 holdings in the S&P 500 altogether.
What stock is now in the 7th position?
Berkshire Hathaway. Warren Buffett’s old economy conglomerate has now joined the elite technology companies at the top.
With Tesla faltering, why not add Berkshire Hathaway to the Magnificent 7 list?
Berkshire Hathaway Versus Alphabet
The argument for including Berkshire Hathaway isn’t as far-fetched as it may seem. When you look at the valuations and fundamentals of Berkshire Hathaway and compare them to some of the other Mag 7 stocks, there are a lot of similarities.
Tracey compared Berkshire Hathaway (BRK.B) to Alphabet (GOOGL) because Alphabet is one of the cheapest of the Mag 7 stocks.
1. Cash Rich:Berkshire Hathaway had $168 billion in cash as of Dec 31, 2023. Alphabet had $110 billion as of Mar 31, 2024.
2. Share buyback plans:Berkshire bought back $9.2 billion in 2023 and Alphabet announced an additional $70 billion for 2024.
3. Attractive P/E ratios:Berkshire Hathaway’s forward P/E is 22.1 while Alphabet’s is 23.3.
4. Attractive P/S ratios:Berkshire Hathaway’s P/S ratio is 2.4 while Alphabet’s is 6.4
Old Economy Companies in Berkshire Hathaway: Winners?
How do you value the rest of Berkshire’s portfolio in the companies it owns outright? Tracey looked at some publicly traded competitors for ideas.
1. The Sherwin-Williams Co. (SHW)
Sherwin Williams makes paint. Berkshire Hathaway owns competitor Benjamin Moore. Sherwin Williams is not cheap. It’s trading with a forward P/E of 26. In the first quarter, sales at the consumer brand segment fell 7% as fewer homes sold and less remodeling was done.