Warren Buffett’s Berkshire Hathaway recently released its 13F filing, revealing its stock portfolio activity for the fourth quarter of 2024. While many of Berkshire’s holdings are fairly valued or overvalued, some undervalued gems offer compelling investment opportunities. Let’s delve into Berkshire’s latest buys and sells, and highlight four Stocks To Buy Today based on Morningstar’s analysis.
Berkshire Hathaway’s Q4 2024 Portfolio Moves
Berkshire Hathaway initiated a new position in Constellation Brands (STZ), a leading alcoholic beverage company with a portfolio of popular Mexican beer brands. Despite a recent stock slump, Morningstar analysts see long-term value in this wide-moat company.
Berkshire also added to existing positions in several companies, including Domino’s Pizza (DPZ), Occidental Petroleum (OXY), Pool Corp (POOL), Sirius XM (SIRI), and Verisign (VRSN). Notably, Berkshire has continued to increase its stake in Occidental Petroleum and Verisign in 2025, signaling long-term confidence in these holdings. Regulatory filings indicate ongoing purchases of Occidental Petroleum, Verisign, and Sirius XM into 2025.
On the selling side, Berkshire completely exited its position in Ulta Beauty (ULTA) and reduced its holdings in several financial institutions, including Bank of America (BAC), Capital One Financial (COF), and Citigroup (C). Other companies seeing reduced stakes include Charter Communications (CHTR), Liberty Media Corp C Liberty Formula One (FWONK), Louisiana Pacific (LPX), NU Holdings (NU), and T-Mobile (TMUS).
4 Undervalued Stocks to Buy Now from Buffett’s Holdings
While most of Berkshire’s publicly traded stocks are currently at or above fair value, the following four stand out as undervalued opportunities according to Morningstar’s analysis:
1. Ally Financial (ALLY)
- Morningstar Rating: 4 stars
- Morningstar Economic Moat Rating: None
- Undervalued by: 19%
Ally Financial, primarily focused on auto loans, has shown improved financial performance, with lower operating and credit costs contributing to solid earnings. Morningstar analyst Michael Miller believes the market is underestimating Ally’s long-term profitability.
2. Constellation Brands (STZ)
- Morningstar Rating: 5 stars
- Morningstar Economic Moat Rating: Wide
- Undervalued by: 40%
Constellation Brands’ wide moat stems from its strong portfolio of Mexican beer brands. Despite recent challenges in the wine and spirits segment, Morningstar analyst Dan Su remains confident in the company’s long-term growth prospects, fueled by the strength of its beer brands and premiumization trends.
3. Kraft Heinz (KHC)
- Morningstar Rating: 5 stars
- Morningstar Economic Moat Rating: Narrow
- Undervalued by: 48%
Kraft Heinz, a major packaged food manufacturer, is undergoing a strategic shift focused on profitable growth. Morningstar director Erin Lash believes the market undervalues the company’s potential, citing its investments in brand building and operational efficiency.
4. Occidental Petroleum (OXY)
- Morningstar Rating: 4 stars
- Morningstar Economic Moat Rating: None
- Undervalued by: 23%
Occidental Petroleum, a large independent oil and gas producer, is positioned to benefit from its vast US oil and gas holdings and its leadership in carbon capture initiatives. Morningstar director Josh Aguilar believes the company is on the cusp of earning its cost of capital.
Conclusion
These four stocks, all part of Warren Buffett’s Berkshire Hathaway portfolio, represent compelling investment opportunities based on Morningstar’s in-depth analysis. While market sentiment can fluctuate, these undervalued companies possess strong fundamentals and long-term growth potential. Consider these stocks as you research potential additions to your portfolio.
