Berkshire Stock Is Cheap. It’s One of Barron’s Top Stock Picks, Too.

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Warren Buffett

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This article is an excerpt from Barron’s 10 favorite stocks for 2022, published on Dec. 17. To see the full list, click here.

When Berkshire Hathaway CEO Warren Buffett made his initial equity gift to the Bill & Melinda Gates Foundation in 2006, he wrote that Berkshire’s stock is an “ideal asset to underpin the long-term well-being of a foundation.”

“The company has a multitude of diversified and powerful streams of earnings, Gibraltar-like financial strength, and a deeply imbedded culture of acting in the best interests of shareholders.”

That’s still the case 15 years later.

The Class A stock (ticker: BRK.A), at about $454,550, is up 31% this year. Buffett refuses to pay a dividend, but Berkshire has ramped up its stock buybacks and should repurchase more than 4% of its shares this year. It trades for 1.35 times our estimate of year-end book value, a cheap level, given that its businesses are probably worth much more than their carrying values.

Berkshire’s stake in  Apple  (AAPL) alone is worth $160 billion, following the iPhone maker’s recent run-up.

Barron’s Stock Picks for 2022

We have identified these 10 as among the best candidates to outperform the market next year.

Company / Ticker Recent Price YTD Change 2021E EPS 2022E EPS 2022E P/E Dividend Yield Market Value (bil)
Amazon.com / AMZN $3,377.42 4% $41.11 $51.37 65.7 None $1,713
AT&T / T 23.71 -18 3.38 3.17 7.5 8.8% 169
Berkshire Hathaway / BRK.A 454,550.00 31 17,466.30 18,928.50 24.0 None 673
General Motors / GM 58.39 40 6.73 6.93 8.4 None 85
Hertz Global Holdings / HTZ 21.01 -22* 4.02 2.55 8.2 None 10
IBM / IBM 125.93 5 10.05 11.04 11.4 5.2 113
Johnson & Johnson / JNJ 173.01 10 9.83 10.38 16.7 2.5 455
Nordstrom / JWN** 20.05 -36 1.27 1.99 10.1 None 3
Royal Dutch Shell / RDS.B 42.82 27 4.86 6.19 6.9 3.9 166
Visa / V*** 214.37 -2 5.91A 7.04 30.5 0.7 467

*Since July 1. **Estimates for Jan. 2022 and Jan. 2023 fiscal year ends. ***Sept. fiscal year end. E=estimate. A=actual.

Source: FactSet

Write to Andrew Bary at andrew.bary@barrons.com