While acquiring equity shares based on one person’s guidance is an incredibly risky approach, it’s possible to make an exception for Warren Buffett stocks. Fundamentally, the legendary investor – known as the Oracle of Omaha – has been around for a long time. Stated differently, he knows how to navigate both bull and bear markets.
Another catalyst for targeting the top holdings of Buffett’s conglomerate Berkshire Hathaway (NYSE:BRK-B) is that the investor focuses on viable prospects. He doesn’t mess around with junk ideas. Therefore, if you narrow this list down to only the undervalued enterprises, you just might increase your potential for profitability.
As with any investing approach, you must conduct your own due diligence. Still, these Warren Buffett stocks present a very attractive case.
Kraft Heinz (KHC)
Easily one of the top Warren Buffett stocks to buy, Kraft Heinz (NASDAQ:KHC) is the third-largest food and beverage company in North America. Also, its public profile adds that it’s the fifth-largest player in the world. That puts KHC in an enviable position because no matter what happens in the economy, people have to eat.
While Kraft Heinz isn’t the most exciting company to discuss, it gets the job done. Last fiscal year, the company beat all its bottom-line targets. Indeed, the average positive earnings surprise came out to 6.9%. For the current fiscal year, experts project earnings per share to land at $3.04. That’s a relatively decent improvement over last year’s print of $2.98.
Still, KHC stock trades at only 12.15X forward earnings, below the sector median 15.52X. Also, the company’s book multiple sits at 0.91X. Frankly, these stats seem unusually low given the enduring relevance of the food and beverage industry. As well, Kraft Heinz enjoys significant brand power. Therefore, it’s one of the Warren Buffett stocks to put on your radar.
Citigroup (C)
A giant among major financial institutions, Citigroup (NYSE:C) makes for a solid case for Warren Buffett stocks to consider. In some ways, the current environment might be beneficial to big banks. As the latest jobs print demonstrated, the economy is still robust. However, interest rates are elevated, yielding higher profits on loans. Since these high rates are occurring at a time of high employment, this dynamic may bode well for Citigroup.
While the company isn’t exactly riveting, it pleasantly raised eyebrows last year. First, the company beat all its bottom-line targets in fiscal 2023. Moreover, the average positive earnings surprise came out to just over 18%. For the current fiscal year, analysts are looking for EPS of $5.25 on sales of $73.74 billion. Last year, the company posted an EPS of $5.52 on revenue of $72.32 billion.
Notably, C stock trades at a 1.52X trailing-year sales multiple, lower than the sector median 2.43X. Given the strong performance last year and the robust labor market, it’s possible that Citigroup could print revenue at the high end of the estimate spectrum, which is $74.78 billion.
Kroger (KR)
Another top-tier idea for Warren Buffett stocks, Kroger (NYSE:KR) may be the most sensible opportunity. As a grocery store operator, Kroger fundamentally enjoys permanent demand. Again, people have to eat. Not only that, the company could benefit from the trade-down effect. If inflation remains hot, consumers might eschew eating out for cooking at home. Obviously, grocery stores would provide the ingredients, making KR stock rather compelling.
Another element working in the grocer’s favor is consistency of performance. Last fiscal year, the company beat all its bottom-line targets. The average positive earnings surprise clocked in at nearly 8%. Its best performance was for the quarter ended Jan. 30, 2024, when the earnings surprise jumped to 18.6%.
For the current fiscal year (2025), analysts are looking for EPS of 4.43 on sales of $148.75 billion. Granted, these stats are disappointing compared to last year’s results of $4.76 EPS on sales of $150.04 billion. However, analysts might be understating the power of the trade-down effect. Therefore, I find its modest forward earnings multiple of 12.89X enticing.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
