1 No-Brainer Stock to Buy Now with $360

If you were going to buy just one stock, you would want it to have some key characteristics, and among the best is a share price that increases with the market but holds steady when markets fall.

In 2022 when the market fell by 20%, Berkshire Hathaway treaded water, essentially beating the market by 20%. That’s not really a surprise given that, on average, since inception, Berkshire has averaged 20% annualized gains while the market’s returns each year compounded at an average rate of 10%.

Fast forward to this year and the market is up by double-digit percentage levels, but so too is Berkshire, albeit it’s trailing somewhat. Nonetheless, history and track record are very much on the side of Berkshire and its revered CEO, Warren Buffett. Yet there’s still more to come, and that’s nowhere more evident than in the valuation. Let’s take a peek behind the curtain to see how just how high Berkshire could go.

Key Points

• Buffett’s firm is undervalued according to analysts and a cash flows analysis.
• It also trades at a low price-to-earnings ratio and has a high return on invested capital with a proven track record.
• Berkshire effectively acts as a wide moat exchange-traded fund with a performance record that far eclipses other ETFs.

Berkshire Is Undervalued

Berkshire Hathaway may well have outperformed the market over the past couple of years but, if analysts are to be believed, there is more fuel in the tank to drive the share price higher. Sitting close to $360 per share, analysts forecast that the Oracle of Omaha’s firm could rise as high as $405 per share before reaching fair value. When a calculation of cash flows is performed and discounted back to the present, the fair value is even higher at $462 per share.

No matter which way you examine Berkshire from a valuation standpoint, it is attractive. And it’s no surprise why given that annually it receives an astonishing $6 billion in dividends. That’s passive income simply for doing nothing more than holding its existing positions.

Approximately $1 billion of that comes from Apple alone, which has already grown from a $36 billion initial investment to closer to $180 billion, excluding the annual dividends.

The Munger Effect

No doubt, the Sage of Omaha and staff at Berkshire are struggling to deal with the passing of Buffett’s most trusted right-hand man and lieutenant, Charlie Munger. But Charlie’s impact on Buffett, specifically with respect to buying great companies at fair prices versus fair companies at great prices, will live on long into the future.

As a result of his influence, Berkshire now owns a host of great businesses from Apple to BNSF. Berkshire is an ideal stock because it’s not reliant on a single business model to succeed. It has a collection of businesses that can do well in any economic environment, and the aggregate of them all acts more like an exchange-traded fund of wide moat firms than a single-sector focused firm.

Final Thoughts

So, if you have $360 to spare, and are wondering the best way to invest it, you can do a lot worse than to buy a single share of Berkshire Hathaway B-shares.

The company is undervalued, enjoys a perfect Piotroski Score of 9, generally trades with low price volatility, has a 10x price-to-earnings ratio, and an attractive 12.6% return on invested capital.

All in all, it’s a solid place to park capital if you want to buy a stock and ignore it for the next few decades.