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Four New Buffett Picks
Kenny
February 21, 2025
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Smart Investors Are Betting On A.I. Stocks—Are You?
Experts say Trump’s $500B A.I. investment plan could transform the industry.
Meanwhile, a small but ambitious A.I. healthcare company just went public after eight years of innovation, securing $18M in funding and partnering with industry giants.
With a $120M market cap and shares still under $2, this stock may not stay cheap for long.
THE MONEY IDEA💡
Four New Buffett Picks
Welcome to Money Masters!
Warren Buffett and his team at Berkshire Hathaway continue to fine-tune their portfolio, identifying investments with strong long-term potential. This report explores four new Buffett-backed picks that are currently undervalued and poised for future growth. Based on expert analysis from Morningstar, these companies stand out due to their strategic positioning, solid fundamentals, and attractive entry points.
Let’s dive in.
THE MONEY IDEA💡
Four New Buffett Picks
Industry: Credit Services
Current Status: Trading at a 19% discount to fair value
Berkshire’s Stake: Owns over 9% of Ally Financial.
Core Business: A leading auto lender with additional offerings in mortgages and credit cards.
Solid Q4 Earnings: Adjusted EPS jumped to $0.78 from $0.40 last year, showing strong recovery.
Credit Costs Improving: Net charge-offs are stabilizing, and auto delinquency rates are showing positive trends.
Long-Term Strength: A more efficient funding structure should lead to better returns over time.
Bottom Line: With its stock still trading below fair value, Ally presents a strong turnaround opportunity for investors.
Industry: Oil & Gas Exploration & Production
Current Status: Trading at a 23% discount to fair value
Berkshire’s Stake: Holds a 27% ownership position in Oxy.
Oil & Gas Leader: One of the world’s largest independent oil and gas producers.
Major Acquisition: $12 billion CrownRock purchase enhances Midland Basin production.
Carbon Capture Initiatives: Investing in direct air capture technology to differentiate from competitors.
Resilient Business Model: With steady commodity prices and strong cash flow, Oxy remains well-positioned.
Bottom Line: With continued expansion and Buffett’s backing, Occidental Petroleum is a solid energy play.
Industry: Beverages—Brewers
Current Status: Trading at a 40% discount to fair value
Berkshire’s Move: Initiated a position after a 25% drop in stock price in early 2025.
Market Leader: Owns top-selling Mexican beer brands, including Corona and Modelo.
Beer Sales Holding Strong: Despite consumer spending pullbacks, Modelo and Pacifico continue to grow.
Challenges in Wine & Spirits: A 14% sales decline in this segment has dragged performance.
Long-Term Growth Potential: Strong brand equity and premiumization trends support future expansion.
Bottom Line: Constellation Brands’ leadership in the beer market makes it a compelling undervalued investment.
Industry: Packaged Foods
Current Status: Trading at a 48% discount to fair value
Berkshire’s Stake: Owns over 34% of Kraft Heinz.
Strategic Overhaul: Moving away from aggressive cost-cutting to focus on sustainable growth.
Stock Opportunity: Shares trade at nearly half of their fair value estimate of $56.
Brand Investments: Increased R&D and marketing efforts are expected to drive long-term gains.
Dividend Yield: Offers a solid 5% dividend yield, appealing to income investors.
Bottom Line: With a deeply undervalued stock and a solid turnaround strategy, Kraft Heinz is positioned for a rebound.
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