Warren Buffett has built a corporate empire of more than 60 companies in sectors spanning railroads, insurance, energy, chemicals, retail, and food. At 88, Buffet is one of the most powerful investors in the world, thanks to his uncanny ability for making money in almost every venture.
The cornerstone of his success stems from his work as Chairman and CEO of Berkshire Hathaway; the owner of more than 60 businesses, including battery brand Duracell and insurer Geico.
Over the last 50 years, Warren Buffett has delivered a 21 percent compound annual return to Berkshire’s shareholders, which is why his stocks are a popular source for investors. Let us take a closer look at the top Warren Buffett stocks that look like great picks to buy right now.
PNC Financial (NYSE: PNC)
The Oracle of Omaha has always been a long-standing supporter of financial sector companies. Late last year, Berkshire Hathaway became the biggest shareholder in Pittsburgh-based bank PNC Financial Services Group Inc.
In the third quarter, his conglomerate spent $830 million building a new position in the bank. Even though that is a substantial position for most hedge funds, it only accounts for 0.4 percent of Berkshire’s overall equity portfolio.
PNC, the biggest bank in Pittsburg, has seen its assets, loans, and deposits grow at a steady pace in recent years. The bank boasts a healthy balance sheet and low loan losses, but the lack of loan diversification is still a concern.
PNC Financial has one of the best business mixes in the lending sector, enabling it to continue making steady progress toward improving its revenue streams. Rising U.S. interest rates have helped ease margin pressure to a great extent, in turn improving its net interest income.
The company returned $1.2 billion of capital to shareholders in the fourth quarter through dividends on common shares of $.4 billion and repurchases of 6.1 million common shares for $.8 billion. And since PNC stock gets Uncle Warren’s approval, maybe you should consider it, too.
General Motors (NYSE: GM)
The U.S. automotive industry wasn’t a stock market favorite sometime last year when words like “tariffs” and “trade wars” began to dominate news headlines. However, that did not deter Buffett and his lieutenants at Berkshire Hathaway from increasing their stake in General Motors. Berkshire upped its stake in GM by more than 20 million shares to 93.19 million shares overall during the fourth quarter.
It is possible that Warren Buffett liked GM because it was undervalued at the time of buying. With a price-to-earnings (P/E) ratio of 6.97 as of March 12, 2019, GM is still below industry average. The other likely scenario is that he likes the automaker’s vast amount of industrial infrastructure. Bob Lutz, former GM Vice Chairman predicted in November 2017 that such infrastructure will be the key to generating cash in the auto industry in the future.
GM posted strong fourth-quarter and full-year 2018 financial results on the back of higher pricing. Revenue for the full year was $147 billion, while adjusted earnings came to $6.54 per share. The company hopes to pull in approximately $2 billion to $2.5 billion in cost savings this year and has also maintained its dividend.
Travelers Inc. (NYSE: TRV)
Warren Buffett’s Berkshire Hathaway currently holds 3.5 million shares of Travelers Inc., according to Berkshire’s latest 13F filing with the SEC. A 13F is a document that hedge funds must file with U.S. securities regulators, revealing their long positions within 45 days of the previous quarter’s end.
Buffet could have picked other insurance companies including dividend aristocrats like Aflac and Cincinnati Financial. Instead, he decided to go for Travelers Inc., a company headquartered in New York City. Travelers participates in both personal and commercial insurance lines and offers a broad product range.
The company evenly splits its personal lines between homeowners and auto insurance. It offers a variety of coverage types for companies of different sizes through its commercial operations but mainly concentrates on serving mid-size businesses. It distributes its policies via a network of over 11,000 independent agents and brokers.
Travelers Inc. is a cash cow in the U.S. insurance market. It also operates in the United Kingdom, Canada, Brazil and the Republic of Ireland. The company has set up reinsurance schemes to trim down the maximum potential losses as much as possible and mitigate risks.
Moreover, it has continued to reward the loyalty of its shareholders through cash dividends without disruption for 147 years. Furthermore, its annual dividend per share grew by 210% to $2.83 between 2005 to 2017. Last year, the company increased its quarterly dividend by another $0.05 to $0.77.