The Key Stocks Positioned for Growth in 2024: Insights from Warren Buffet’s Portfolio

Photo of author

By Ronald Tech

When it comes to investing, few sources can match the track record of Warren Buffett. The CEO of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) has consistently outpaced the S&P 500 over nearly 60 years, boasting an impressive compounded annual return of approximately 20%. This figure is a staggering double the performance of the S&P 500.

Warren Buffett at a Berkshire conference

Image source: Getty Images.

Buffett’s Bank of America Endorsement

Bank of America (NYSE: BAC) has received Buffett’s endorsement as a formidable pick for 2024. This bank is not only Buffett’s preferred banking stock but also happens to be Berkshire’s second-largest holding, following Apple. Buffett has lauded the bank’s CEO, Brian Moynihan, on multiple occasions, expressing his strong support for Moynihan’s leadership. Berkshire Hathaway’s investment history in the financial sector aligns with Buffett’s expertise, which places significant emphasis on competent bank management. Moynihan’s management has successfully steered Bank of America through the aftermath of the financial crisis, rebuilding its market standing and reputation.

In its third quarter, Bank of America showcased a 10% rise in net income, amounting to $7.8 billion, along with a 3% increase in revenue, reaching $25.2 billion. The strong profit growth can be attributed to a lower tax rate as well as impressive performance by the bank, despite prevalent economic challenges. Bank of America continues to exhibit resilience, with ample prospects for dividend growth—currently, the stock yields 2.9%. With the economy’s shift towards recovery and the stock’s compelling valuation, Bank of America appears primed for favorable performance in the upcoming year.

D.R. Horton in the Spotlight

Another stock that stands to benefit from the anticipated economic recovery in 2024 is D.R. Horton (NYSE: DHI), the largest U.S. homebuilder. As one of the three homebuilder stocks acquired by Berkshire in the second quarter of 2023, D.R. Horton’s stock presents a well-positioned investment opportunity. The company’s financial outlook remains promising, leveraging the sustained potential of the housing market, which has struggled due to limited available inventory.

See also  The Illuminating Rise of Illumina Stock: A Legal Setback Sparks Investor Enthusiasm

The minimal inventory, coupled with the lingering impact of historically low mortgage rates, has induced a reluctance among homeowners to sell, bolstering home prices. The housing shortage in the U.S. is estimated to stand at 4 million homes, signifying prolonged demand and upward pressure on prices. Consequently, D.R. Horton, well-capitalized and attuned to this robust demand, stands to benefit. Its fiscal fourth-quarter revenue demonstrated a notable 9% boost to $10.5 billion, with sales orders soaring by 39% to 18,939 homes. The robust numbers underscore tremendous demand.

Given the anticipated persistence of new home demand and D.R. Horton’s modest price-to-earnings ratio of just 11, the stock appears to offer favorable prospects for continued growth in 2024.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Jeremy Bowman has positions in Bank of America. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, Lennar, and NVR. The Motley Fool has a disclosure policy.