This isn’t the only signal hinting that valuations might be getting stretched in 2025. And yet, despite rising concerns, the ’Oracle of Omaha’ and his team are still buying some US shares.

So what stocks is the billionaire investor buying? And should investors follow in his footsteps?

Buffett’s shopping list

With a reputation for being a value-oriented investor, the fact that Buffett’s buying at a time when valuations are high seems strange, on the surface. But digging deeper, he’s actually still executing the same tried and tested strategy of prioritising value at a fair price.

Two of his recent investments in Nucor (NYSE:NUE) and UnitedHealth Group (NYSE:UNH) seem to demonstrate this perfectly.

So what do these businesses do? And why is Buffett’s team buying them now?

An AI infrastructure play

Nucor is a US steel producer. In fact, it’s one of the largest in the country, operating an expansive network of furnaces that recycle scrap metal into quality steel. This unique approach drastically reduces the cost of manufacturing, giving the group a notable competitive edge over its US rivals – something Buffett loves to see.

With the US imposing a 50% tariff on imported steel, Nucor now looks far more attractive to steel consumers. And when combined with surging steel demand courtesy of artificial intelligence (AI) infrastructure and national electrification spending, the business looks like it could be a new champion within the supply chain of countless US-based businesses.

Combining this with an undemanding forward price-to-earnings ratio of 12.2, it’s not so surprising that Buffett‘s taken an interest.

Of course, there are still risks. Even with tariffs, steel demand remains highly cyclical and sensitive to activity within the construction and industrials sectors.

Since higher interest rates often subdue activity within these industries, Nucor’s growth could prove lacklustre, especially if inflation continues to prove sticky. And if AI infrastructure spending starts to slow, the firm could lose a significant tailwind that’s currently driving it forward.

Defensive healthcare

UnitedHealth’s also another seemingly cyclical strategy the billionaire’s pursuing. The firm’s the largest health insurance provider in the US. And with an ageing population, demand for its services is suspected to steadily trend upward.

That’s potentially great news for shareholders, given that UnitedHealth’s business model is both high-margin and cash-generative. However, given its leading role within the US healthcare (a sector that’s becoming increasingly scrutinised), the company has been getting a lot of attention from regulators.

The Department of Justice is already investigating the firm for anti-competitive practices. And with political pressure to curb healthcare costs, management’s long-term pricing power may be restricted. This, among other factors, is one of the reasons why UnitedHealth shares have tumbled close to 40% in the last 12 months.

The bottom line

For both Nucor and UnitedHealth, Buffett’s bullish stance makes a lot of sense given the long-term opportunities at seemingly reasonable valuations. Therefore, I think it’s wise for investors to dig a bit deeper and see whether or not these US stocks could be a good fit for their own portfolios.

The post With stock prices at record highs, Warren Buffett’s been buying these shares! appeared first on The Motley Fool UK.

The company in question is Nucor Corp (NYSE:NUE). Buffett and his team actually invested back in the first quarter of 2025 and then topped up the position in the second quarter. But investors have only discovered the $953m spend following Berkshire’s latest regulatory filings.

Given that Buffett has been a net seller of US stocks for 11 straight quarters, seeing him deploy fresh capital in the US stock market definitely warrants attention. So, what’s behind this investment? And should others think about following in his footsteps?

Exploring the AI opportunity

On the surface, Nucor doesn’t look like an AI stock as it specialises in steel manufacturing. And with a forward price-to-earnings ratio of 12.6, the shares are certainly not priced like an AI stock either.

However, digging deeper, a clearer picture of why Buffett and his team might have invested starts to emerge. The company operates the largest electric arc furnace steel network in America. This makes it one of the largest leaders in low-cost domestic steel production.

That’s a pretty powerful advantage to have in 2025, given imported steel is facing a 50% tariff. And with Nucor offering one of the cheapest domestic alternatives, demand is skyrocketing from AI data centres.

After all, the expansion of US digital infrastructure continues to charge ahead and is heavily reliant on structural steel for buildings and power systems among other things. In fact, Nucor is already a leading supplier to some of the largest data centre projects in the US, with management actively investing to keep its competitive edge.

With that in mind, it’s not surprising to see Buffett take an interest.

What could go wrong?

There’s no denying that Warren Buffett has a knack for spotting tremendous investing opportunities. After all, through Berkshire Hathaway, he’s essentially doubled the average stock market return since the 1960s. However, not every investment made has been a winner. And just like every other stock, Nucor has some risks we must consider.

Even with the tailwinds from AI, steel remains a classically cyclical industry. A future slowdown in demand will squeeze profit margins. And with the group making aggressive investments in production expansion and technology upgrades, a sudden swing in demand could result in an overstretched balance sheet.

It’s also important to recognise that Nucor isn’t the only low-cost steel business seeking to capitalise on AI infrastructure tailwinds. Competitive pressures could start steadily chipping away at the group’s operational efficiency advantage. As such, there’s no guarantee that Nucor will be successful in executing its current strategy.

The bottom line

With demand for domestic steel rising, Nucor is seemingly in quite a favourable position. The risk of a cyclical downturn can’t be ignored, but with Buffett putting almost $1bn to work, it’s a risk that he certainly seems to think is worth taking. And with such an impressive track record, investors might be well rewarded for taking a closer look at this US stock.

The post Warren Buffett is buying shares in this secret AI stock that’s already up 7,450% since its IPO! appeared first on The Motley Fool UK.

What does it do?

Nucor is one of the largest steel producers in the US. The company has a strong track record of profitability and dividend growth. It appears well-positioned to benefit from the long-term growth of the steel industry.

I have owned shares in the company since 2019. With steady growth since, I am considering the pros and cons of maintaining my position as part of my Stocks and Shares ISA.

Should I keep my shares?

• Strong track record of profitability: Nucor has held a strong record since 1973. With a clear focus on efficiency and cost control, it maintained profitability even during periods of economic weakness. Earnings have grown by 41% in recent years, with a net margin of 17%.
• Dividend growth: Nucor has increased its dividend for 50 consecutive years. The company’s dividend yield is currently 1.23%. This is not necessarily high, but growing steadily.
• Well-positioned for growth: The steel industry is expected to grow in the long term. This is due to the increasing demand for steel from infrastructure projects, the automotive industry, and the renewable energy sector.
• Stability: Despite uncertainty in the wider markets, the demand for Nucor’s products and services is consistent. This is due to the long lead-in time for construction projects. As a result, the share price rarely fluctuates by more than 5% weekly, below the sector volatility average of 7%. This reliability is often valued by passive investors.

Time to sell?

• Valuation: Following the recent growth, Nucor shares may now be overvalued. The price-to-earnings (P/E) ratio of 6.1 times is slightly above the sector average at 5.9 times. A discounted cash flow calculation suggests the shares may be 99% overvalued.
• Cyclical industry: The steel industry is cyclical, meaning that it is subject to periods of boom and bust. Expected earnings over coming years are down 35%, indicating uncertainty about whether growth seen in previous years can continue.
• Environmental concerns: The steel industry is a major emitter of greenhouse gases. Nucor is working to reduce its environmental impact, but this could affect its profitability in the short term.
• High debt levels: Nucor has a high debt level, which could make it vulnerable to financial distress during a downturn. These levels are sustainable at present, but if the economy declines further, investors may begin to worry.
• Insider selling: The management team of Nucor have been selling millions of dollars worth of shares in recent months. This may be unrelated to future confidence, but without insider buying in the same time period, it is not inspiring.

Will I keep it?

Since I first bought Nucor for my Stocks and Shares ISA, the shares have performed well. The company is well-positioned to benefit from the long-term growth of the steel industry. However, the steel industry is cyclical, and I do not want to be caught up if investor sentiment changes. I will be gradually selling the shares, and putting my money to work in more undervalued areas.

The post Time to take profits on my oldest Stocks and Shares ISA holding? appeared first on The Motley Fool UK.

But what exactly are these types of investments? How can you identify them? And most importantly, how can they be used to grow long-term wealth?

Let’s dive in.

What are value stocks?

Typically, shares of a business are classified as either growth or value. The latter category consists of stocks priced below the underlying company’s intrinsic value. A value investor’s goal is to buy shares of a high-quality enterprise for less than what they’re actually worth.

The value investment strategy is almost identical to focusing on buying undervalued stocks. However, there is a slight difference. 

A high-growth company whose share price drops can fall into the undervalued territory. But that doesn’t make it a value stock. So, what does?

Characteristics of value stocks

There isn’t a strict definition or standard list of requirements for what constitutes a value stock. However, most share a lot of characteristics, such as:

• Mature business with proven products or services
• Slow but steady growth rates
• Consistent and stable earnings
• Often pays dividends

Value stocks can be considered quite boring. Yet with less interest in this region of the stock market, bargain-buying opportunities emerge more frequently than in the growth sector. It also implies that the share price of a value stock is significantly less volatile.

Top value stocks in the UK

The UK is home to a wide collection of mature businesses across a vast number of industries. In terms of identifying which ones are the best value stocks, it’s hard to give a clear answer. 

Valuation is quite a subjective process. That’s why different analysts calculating a firm’s intrinsic value often arrive at vastly different numbers. But there’s no way of finding out which one is correct until after it’s too late.

However, it makes sense to start with a simplified multiples approach using the price-to-earnings (P/E) ratio. It’s also worth adding a few additional selection criteria:

• The business must have a market capitalisation of at least £100m to avoid the risk of stumbling into more speculative territory
• The stock must have an average daily trading volume of 150,000 to ensure ample market liquidity
• Firms must have a minimum average earnings growth rate of 7% to avoid including companies that are shrinking

Based on these requirements, here are the top five potentially undervalued shares in the FTSE 100, as of February 2026:

Segro

Segro is a real estate investment trust that’s been around for over a century. The group focuses on constructing and acquiring big-box warehouse facilities in prime locations. However, the portfolio also contains smaller urban logistics centres for customers seeking last-mile delivery solutions.

In total, management now commands 10.9 million square metres, rented out to 1,371 customers across the UK and Europe. Two of its largest clients are IKEA and Deutsche Post.

3i Group

Founded in 1945, 3i Group is a leading international investment organisation specialising in private equity and infrastructure. Today, it manages £36bn worth of assets across northern Europe and North America. 

Using its professional network, private businesses funded or acquired by the group are linked with the right people and facilities to maximise potential. Today, there are 60 businesses within its portfolio, including European Bakery Group, Cirtec Medical, and East Surrey Pipeline. 

Shell

Shell started out as a seashell importer back in 1907. Today it’s one of the biggest independent energy companies in the world, operating in more than 70 countries. 

Its portfolio primarily consists of oil and gas assets. These are used to fuel global transportation, aircraft freight, and electricity generation. And while the company was previously making a big push towards decarbonisation, a new management team changed tactics to focus back on traditional fossil fuels.

While the business is still investing in renewable projects, the scope of these investments has been significantly pulled back as it aims to ramp up its oil & gas production volumes.

Barclays

Barclays is a commercial bank founded in 1896. It targets both consumers and businesses alike with various financial products. The list includes savings and investing accounts, credit cards, mortgages, corporate financing solutions, and investment banking services.

Despite being based in the UK, the bank operates on an international scale. Most of its income originates from interest charges on issued loans to businesses and consumers. The remainder is derived from fees and commissions for its services, with additional contributions from investments and trading activity.

Rio Tinto

Rio Tinto is one of the world’s largest metal and mining businesses, operating in 35 countries. Since its inception in 1873, the group’s portfolio has expanded across numerous raw materials. Today, its product portfolio consists of iron ore, aluminium, copper, borates, diamonds, and processed metals like titanium dioxide, which is used in the aerospace industry.

With electric vehicles and renewable energy technology demand on the rise, management has begun investing in lithium projects. This includes the Rincon project, which is on track to expand production capacity with first production now expected as early as late 2027, before gradually ramping up to 60,000 tonnes of lithium carbonate by around 2030.

Investing in international value stocks

Value stocks can be found beyond the shores of the UK. A stock market can be found in almost all developed nations, each with its own collection of value stocks for investors to consider. The most popular is arguably the US.

Being a value investor in the US is a little trickier than here in the UK. This is because it’s home to some of the most exciting growth opportunities that can make value investing seem incredibly dull in comparison. But that doesn’t mean the opportunities aren’t there.

Using the same selection criteria as before, there are the top five value stocks in order of P/E ratio from the S&P 500 index today.

How to pick value stocks

At the core of value investing is finding strong businesses trading at a low price point. That’s often easier said than done. 

Corporate valuation is an immensely complex topic that even professionals struggle with. The standard approach to estimating intrinsic value requires the construction of discounted cash flow models. 

These models aim to predict the present value of a company’s future cash flows based on a series of assumptions. Assuming the analyst is skilled enough to factor in all the potential threats, it’s possible to identify which stocks are trading below their fair value, presenting a buying opportunity. 

An alternative and far simpler valuation method is to use price multiples. There are several valuation ratios that can indicate whether a stock is cheap or expensive relative to its peers or industry average. 

Some of the most popular ratios used under this technique include:

• P/E Ratio – Arguably one of the most popular valuation metrics, the price-to-earnings ratio is a quick way to compare how much an investor has to pay for each pound of earnings.
• PEG Ratio – The price-to-earnings growth ratio is an extension of the P/E ratio that factors in growth rates to make a more meaningful comparison between two or more companies growing at different rates.
• P/B Ratio – While less popular today, the price-to-book ratio identifies the stocks that are trading below a business’s value if it were to shut down today and pay off all its outstanding financial obligations.

However, relying on these financial ratios alone can be a recipe for disaster. Sometimes a value stock will be trading at a low multiple for a good reason. And any investor buying shares in a seemingly cheap business without knowing why it’s cheap will likely be lured into a value trap.

Should you invest in value stocks?

Focusing solely on investing in UK or international value stocks can be a successful investment strategy. However, that doesn’t make it suitable for everyone. 

Growth stocks have the potential to deliver significantly higher returns at the cost of additional risk. This makes investing in growth shares more appropriate for investors seeking to expand their wealth in the long term. Of course, that’s assuming they’re comfortable with the increased risk profile and stock price volatility.

Value stocks do have wealth-building attributes, especially those that can consistently increase their shareholder dividends each year. However, the pace is much slower, making them more popular with investors seeking to protect the wealth they already have.

Deciding which path to take is a highly personal decision. But nothing prevents someone from investing in growth and value stocks simultaneously to enjoy the benefits of both worlds.

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