Warren Buffett is one of the most successful investors of all time. As such, I find the stocks he owns in the Berkshire Hathaway (NYSE: BRK-B) portfolio are an interesting place to look for investment ideas.
Berkshire’s most recent 13F discloses 49 investments in US equities (investments outside the USA aren’t reported). I’ve been looking at that list to find stocks that I’d like to buy this month.
First on my list is Berkshire Hathaway’s largest holding. A 22% fall in the price of Apple (NASDAQ:AAPL) shares since the start of the year has caught my attention.
The main thing holding back the stock at the moment is its growth prospects. In the current economic climate, there’s a real concern that iPhone sales, for instance, might struggle.
But I think that a short-term headwind is a long-term opportunity. Since it accounts for only about 18% of the global smartphone market, Apple has room to expand over time.
At the Berkshire Hathaway Annual Shareholder Meeting, Buffett said he intends to buy the stock below $150 a share in the future. As of today, the shares trade at $141.
My second Buffett stock to buy in July is Citigroup (NYSE:C). He started buying this one for the Berkshire Hathaway portfolio at the start of the year.
I’ve been steadily accumulating Citigroup shares in my own portfolio too. With the stock falling by 24% since the beginning of January, I plan to buy more shares this month.
The company is in a restructuring process at the moment. The uncertainty around how the business will emerge from the process introduces an element of risk with an investment here.
But I think that the current share price more than justifies the risk. At its recent investor day, the company announced an ambition to achieve 11%-12% returns on tangible equity in the medium term.
The stock currently trades at a price-to-book (P/B) ratio of just over 0.5. If the company can reach its stated target from there, I think that the returns for me as an investor could be huge.
Last on my list of Warren Buffett stocks to buy in July is Berkshire Hathaway itself. In my view, owning the shares is the best way to invest like the Oracle of Omaha.
Since the start of 2022, they’re down 23%. More importantly than that, the share price has recently reached a level that I think is important.
At $268 a share, Berkshire Hathaway stock trades at a P/B ratio of below 1.2. Historically, Buffett has suggested that trading below this level is a sign that it’s materially undervalued.
Nowadays, Buffett thinks that Berkshire’s businesses are worth more than 120% of their collective book value. I therefore think that the current share price is cheap according to his standards.
Of course, he won’t be around forever and that’s a risk to the investment. But I think that the Berkshire Hathaway approach and culture should persist even when he isn’t running the business.
So as well as trying to follow Warren Buffett’s style, I’m also looking at the Berkshire Hathaway portfolio. From there, it comes down to valuation and I think Apple, Citigroup, and Berkshire itself are trading at attractive prices right now.