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8 Stocks Warren Buffett Is Buying (or Should Be)

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Following billionaire investor Warren Buffett into stocks he owns has often been a profitable strategy over the past few decades. But reversing the order—buying a stock before Buffett buys it—can be even more fun and, potentially, more rewarding.

With that in mind, we went prospecting in two groups of companies: stocks that Berkshire Hathaway (symbol BRK.B, $146.11), Buffett’s holding company, has been buying recently, and shares that Buffett doesn't hold but we think he might buy. We looked for the things he looks for: companies that are leaders in their industries, that have a strong commitment to sharing profit with investors, and whose stocks sell for relatively low prices compared with earnings and underlying asset value.

A few caveats: First, Buffett's stock-picking abilities are legendary, but even the Oracle of Omaha has had some clunkers. Second, many of Berkshire's stock picks are now made by Buffett's two investing deputies, Todd Combs and Ted Weschler, not Buffett himself. And third, anyone guessing which stocks might be attractive to Berkshire is doing just that—guessing. Buffett hasn't sought our advice, and we're not waiting for the phone to ring.

Here's a look at four stocks that Berkshire has purchased recently, and four that we humbly suggest the master should consider.

Within each category, stocks are listed in order of market capitalization. Prices and related figures are as of April 22, 2016; price-earnings ratios are based on earnings estimates for the next four quarters, including the current one. The four stocks already owned by Berkshire Hathaway saw purchases since October 1, 2015, according to filings with the Securities and Exchange Commission.

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