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Pete Souza via Wikipedia
Iconic investor Warren Buffett has become one of the wealthiest people in the world by identifying value in the stock market. In a nutshell, Buffett buys low and sells high — the goal of any investor. Imagine finding stocks to buy at an even better value than what Buffett gets.
Fortunately, due to regulatory disclosure laws, traders are able to do just that. Buffett’s Berkshire Hathaway Inc. (BRK.A, BRK.B) must file quarterly 13-F disclosures with the U.S. Securities and Exchange Commission that reveal everything Buffett has been buying and selling. More often than not, Buffett eventually sells these stocks for a profit. However, sometimes it may take a while for the market to see the value that Warren Buffett recognizes.
If you take a look back at Berkshire’s recent 13-F filings, some of the stocks that Buffett has been buying now offer a better value than when he bought them. Here are three stocks to buy that you can get at a better price than even Warren Buffett paid.
By Wayne Duggan
| January 2017
This slide show is from InvestorPlace, not the Kiplinger editorial staff.
P/E When Buffett bought: ~35.0
P/E today: 31.4
Warren Buffett has been buying shares of Visa Inc. as recently as Q3 2016. Although it’s not possible to pinpoint the exact share price at which Buffett bought his V stock, the stock averaged a Q3 price-to-earnings ratio of around 35. Since Sep. 30, V stock has dropped about 5.2%. That means that today investors can buy shares at a lower price and a better value than even Warren Buffett paid.
Visa stock is not the only credit card company that Berkshire holds. In fact, it’s not even Buffett’s largest credit card stake. Buffett holds a, $11.3 billion stake in American Express Company (AXP) as well. AXP stock is one of Buffett’s five largest holdings. But it has’t been AXP stock Buffett is interested in lately.
Buffett seems happy with his AXP stake, but he has been building a larger position in V stock. Not only was he buying Visa stock at an average price of $80.06 in Q3, he was buying V stock at around $72.68 as far back as Q1 2016 as well.
P/E When Buffett bought: ~131.6
P/E today: 62.6
Axalta Coating Systems Ltd. is not one of the big-name stocks that investors may typically associate with Warren Buffett. In fact, AXTA stock has only been public since late 2014. For whatever reason, Buffett seems to like the stock. On the surface, Axalta stock may seem expensive with a P/E of over 50. However, the company’s P/E was much higher when Buffett was last buying in Q4 2015.
AXTA makes performance and transportation coatings. The stock is down about 6% since Buffett was last buying, but he hasn’t sold a single share.
In 2015, Buffett was an aggressive buyer of AXTA stock. In Q2 2015, he bought 20 million shares at around $33. After that, he added to his stake in Q3 and Q4 at even lower prices. Today, traders can buy AXTA stock at only around $27 per share. That’s a much better price than Warren Buffett paid for the stock.
P/E When Buffett bought: ~41.7
P/E today: 4.2
Much like his stake in AXTA stock, Warren Buffett’s $1.12 billion investment in USG Corporation is relatively modest by Buffett’s standards. However, that $1.12 billion represents a sizable 27% ownership stake in the company.
USG manufactures and distributes a wide range of building materials. Buffett was last buying USG stock in Q3 2014, but hasn’t sold a single share since. At the time Buffett was last buying, USG stock was trading at a P/E of above 40. Since that time, the company’s earnings are up 730%, while its share price is down 2.4%.
USG isn’t one of the Buffett stocks that gets a lot of media attention because the company’s market cap is only $4.1 billion. However, if Buffett saw value in 2014 when the share price was around $30.60, Buffett followers should pounce at the opportunity to buy the stock today at under $30.
This article is from Wayne Duggan of InvestorPlace. As of this writing, he held none of the aforementioned securities
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