Author: Keith Speights, The Motley Fool | Published on: Sun, December 24, 2023 at 12:50 PM GMT+2 | Reading Time: 4 minutes
Warren Buffett, often referred to as the Oracle of Omaha, is not known for making short-term stock predictions. However, in a departure from tradition, I’m venturing to forecast three stocks from Berkshire Hathaway’s portfolio that I believe will emerge as the biggest winners in 2024. Let’s explore each of these stocks and the reasons behind my optimistic outlook.
1. American Express (NYSE: AXP):
American Express has proven to be one of Buffett’s star performers this year, overcoming early challenges to close out 2023 with a remarkable 25% gain. The momentum is expected to persist into the new year, fueled by robust business performance. With six consecutive quarters of record revenue and a 34% year-over-year surge in earnings per share, American Express is riding high.
Macro trends also favor American Express in 2024, with moderated inflation, historically low unemployment levels, and potential interest rate cuts. Despite the positive outlook for other payment processing leaders like Mastercard and Visa, I anticipate American Express to be a standout winner, driven in part by its attractive valuation, currently trading at less than 14.8 times expected earnings.
2. D.R. Horton (NYSE: DHI):
D.R. Horton has outshone expectations with a staggering 70% surge in its stock value this year. The homebuilder’s stellar performance, particularly in the final months of 2023, positions it as a top Buffett stock for the upcoming year. Anticipating interest rate cuts that could boost home sales, coupled with an acute housing shortage in the U.S., D.R. Horton is uniquely positioned to capitalize on these trends.
As the largest homebuilder by volume operating in 33 states, D.R. Horton’s stock is not only well-positioned but also undervalued. With a price/earnings-to-growth (PEG) ratio of 0.64, it presents an attractive investment opportunity considering its growth prospects.
3. Occidental Petroleum (NYSE: OXY):
While Occidental Petroleum has faced challenges in 2023, I predict a turnaround in 2024. Despite being a laggard in Buffett’s portfolio this year, its attractive valuation at 11.3 times expected earnings suggests a potential for improved performance.
Berkshire’s regulatory approval to acquire up to 50% of Occidental’s shares, coupled with Goldman Sachs’ bullish projection of Brent crude hitting $85 per barrel by mid-2024, sets the stage for a more favorable year. If Berkshire aggressively adds to its stake in Occidental, it could trigger broader market interest, driving the stock price higher.
In conclusion, these three stocks present compelling opportunities for investors in 2024. However, always conduct thorough research and consider professional advice before making investment decisions.
Note: This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
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