Warren Buffett, the legendary chairman of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), has consistently delivered impressive returns, averaging nearly 20% annually since 1965—doubling the S&P 500’s performance. These results stem from Buffett’s shrewd business strategies, combined with Berkshire’s capacity to strategically invest funds from its insurance operations. Here are three top Warren Buffett-backed stocks to consider with a $1,000 investment right now:
- Berkshire Hathaway
Berkshire Hathaway is Buffett’s favorite company, and for good reason. With its Class B shares trading around $475, this conglomerate holds major stakes in over 60 businesses, including Dairy Queen and GEICO. It also boasts a $300 billion portfolio of more than 40 stocks, with heavy investments in Apple, American Express, and Bank of America.
While Berkshire recently reported slight declines in revenue and operating earnings for Q3 2024, its financial strength remains undeniable, particularly its cash hoard. The company holds $325 billion in cash and cash equivalents, making it one of the best-positioned companies for a market downturn. Even without immediate investment opportunities, this substantial cash pile is earning approximately $14 billion annually at current Treasury bill rates. For those seeking stability and long-term growth potential, Berkshire Hathaway remains a top choice.
- Chubb Limited
Buffett’s Berkshire Hathaway also recently acquired a 6.7% stake in Chubb Limited (NYSE: CB), a Switzerland-based property and casualty insurer. Trading at around $285 per share, Chubb has seen a 25% rise in 2024, following record revenue and operating income. In Q3 2024, Chubb posted $14.9 billion in revenue and $2.3 billion in operating income, reflecting growth of 7.2% and 14.3%, respectively.
Despite increased pre-tax catastrophe losses, including costs tied to Hurricane Helene, Chubb remains financially strong with $23.8 billion in net cash. The company’s consistent capital returns through dividends and share repurchases make it a shareholder-friendly investment. With 15 years of dividend increases and a 1.3% yield, Chubb’s reliable performance and robust balance sheet justify its current valuation, even with a price-to-book ratio of 1.75, which is near the high end of its five-year range.
- DaVita
Berkshire also holds a significant 44% stake in DaVita (NYSE: DVA), a healthcare company specializing in outpatient kidney dialysis services. Trading at about $164 per share, DaVita has posted a remarkable 54% return in 2024. The company serves approximately 265,400 patients in over 3,100 outpatient centers, predominantly in the U.S.
Despite concerns over its $8.5 billion in net debt, DaVita has the cash flow to manage it, with a trailing-12-month free cash flow of $1.4 billion. Additionally, the company is aggressively buying back stock, reducing shares outstanding by 36% over the past five years, which signals confidence in its valuation. DaVita also has long-term growth potential, with plans to expand into new markets like Brazil, Colombia, Chile, and Ecuador. This makes it an intriguing pick for investors looking for a combination of stability and growth.
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