Warren Buffet Recently Purchased Four Shares. This Collection Stands Out Among the Lot.
One of the world's renowned investors isn't engaging much in investing currently. Warren Buffett, famously, sold off stocks for the eighth consecutive quarter in Q3. This time around, Buffett and his investment managers (Ted Weschler and Todd Combs) decreased Berkshire Hathaway's stake in Apple and offloaded shares from six other holdings.
Nevertheless, Buffett and his team didn't let Berkshire's generous cash stockpile idle. They invested in four stocks, with one being particularly noteworthy.
Buffett's preferred quartet
Berkshire made new investments in only two stocks during the preceding quarter. The most substantial addition was 1.28 million shares of pizza franchise giant Domino's Pizza (DPZ -2.20%). At the end of Q3, Berkshire's stake in Domino's was worth approximately $549.4 million.
Furthermore, Berkshire ventured into the swimming pool supplies market by purchasing 404,000 shares in Pool Corporation (POOL -1.78%). Berkshire ended Q3 with a stake in Pool valued at around $152.3 million.
Besides these two newcomers, Berkshire augmented its positions in just two existing holdings. Its stake in satellite radio operator Sirius XM Holdings (SIRI -2.82%) expanded by 6.99%. Berkshire also added to its Sirius XM Holdings shares in October.
Lastly, Berkshire amplified its position in Heico (HEI 0.57%) by 0.52% in Q3, having initially bought shares in Q2. Berkshire's stake in the aerospace and electronics company was valued at around $214 million at the end of the quarter.
Comparing the stocks
Although Heico outperformed the other recent Buffett acquisitions this year with a surge of more than 50%, Domino's follows closely with a year-to-date gain less than 5%. Pool and Sirius XM are counteracting this trend with drops of approximately 10% and 53%, respectively.
Revisiting the stocks based on valuations, however, reveals a different picture. Sirius XM Holdings boasts a budget-friendly forward price-to-earnings ratio of 7.3. Domino's takes second place with a forward price-to-earnings multiple of 24.3. Pool is slightly more costly, with shares trading at 29.8 times forward earnings. Heico stands out as the exception with a substantial forward price-to-earnings multiple of 63.7.
Wall Street likely doesn't sway Buffett's investment decisions; nevertheless, it's intriguing to see how these stocks compare in analysts' opinions. Sirius XM is the undisputed leader in terms of earnings growth expectations for the upcoming year, projected to increase earnings by 150.9%. Analysts expect Heico's earnings to grow by 16.8%, while Pool and Domino's trail behind with expected earnings growth of 9.3% and 5.6%, respectively.
However, the analysts' forecasts diverge when considering the stocks' performance over the following 12 months. Sirius XM is expected to rise by 11.6%, with Domino's not far behind at 11.4%. Wall Street anticipates Pool's shares to ascend by 6.4% over the coming 12 months. Conversely, the average price target for Heico is 2.5% below its current share price.
Each of these stocks distributes dividends. Sirius XM boasts a lucrative forward yield of 4.2%. Domino's and Pool are virtually identical in this regard, with forward dividend yields of 1.4% and 1.3%, respectively. Heico lags behind with an insignificant divident yield of 0.08%.
The cream of the crop
In my opinion, Domino's is an excellent long-term investment. However, if I had to pinpoint the best of Buffett's recent purchases right now, it would have to be Sirius XM Holdings. Sirius XM appeals to income and value investors, while its growth potential looks promising too.
Nevertheless, Sirius XM shouldn't be considered the best investment among all of Buffett's holdings. There are numerous stocks in Berkshire's portfolio I'd rather invest in, including Amazon.
Despite Buffett's recent reduction in Apple holdings, he continues to demonstrate his interest in finance and investing by expanding Berkshire Hathaway's stake in Domino's Pizza, Pool Corporation, and Sirius XM Holdings, among others. Interestingly, Sirius XM stands out with its promising earnings growth expectations, affordable forward price-to-earnings ratio, and lucrative forward yield, making it an attractive investment option for some, including the author.
