Got $1,000? Here are two Warren Buffett stocks I’d buy today

October 8, 2021 0 Comments

Warren Buffett is known as the most successful investor of all time. His net worth of $110.8bn speaks volumes about his investment strategies over the years. Therefore, investors like me diligently follow Warren Buffett’s investment portfolio, especially when it comes to bank stocks.

The strategy of Warren Buffett is all about making a timely decision of exiting a market or entering the market. And in some cases holding on for a long period. In Q1 2021, Warren Buffett made some significant changes in his pool of investments. Similarly, Q2 2021 also saw some major changes.

As an investor, I am always eager to invest in the companies the CEO of Berkshire Hathaway picks. Therefore, I am have shortlisted two stocks that can be easily purchased within $1,000. I believe these stocks are currently trading at a very cheap price and could have great potential to show explosive growth in the future.

Time for Wells Fargo to regain Warren Buffett’s confidence

Wells Fargo (NYSE:WFC) is an American multinational financial service company. Warren Buffett has invested 0.01% of its portfolio in this business. And so far this year, it achieved an astounding performance of 42%

The management team has smartly kept up the reserves to shield itself from loan defaults. As a result, the bank reported an EPS of $1.38 in its second quarter of 2021. This over-the-top performance has led to Wells Fargo being ranked in the top two percent of all companies in the US. Moreover, the Federal Reserve officials have given the go-ahead to repair the bank’s risk management and governance practices. The two-year-long limit on Wells Fargo’s size following the discovery of a fake account scandal appears to be over. Needless to say, this news was a breath of fresh air for the bank’s officials, which attracted a lot of negative attention.

Despite the push towards improvement, I believe the headwinds of low-interest rates can deal a big blow to the bank’s earnings. Moreover, the decline in Warren Buffett’s holding of the bank in the recent past took away some of the limelight. But its current progress has once again sparked investor interest. Therefore, I believe this stock has the potential to grow further. And at a share price of $47.90, I’m considering adding it to my personal portfolio.

The favourite stock of the Oracle of Omaha

Bank of America (NYSE:BAC) is one of the favourite stocks of the legendary investor. Warren Buffett has invested 14.45% of its portfolio in this bank. With a position roughly worth $38bn, Warren Buffett holds the maximum number of shares of this bank compared to other stocks in the portfolio. Bank of America has been on an upward streak since last year. And has grown by more than 30% in 2021 so far with a share price of $44.32.

Compared to profitability levels, I think this bank stock is currently trading at a relatively low price. Moreover, thanks to its hefty investments in technology, the company is leading the industry with its online and mobile platform functionality. This, along with Warren Buffett continuously increasing stake, makes it an attractive investment in my mind. 

Despite the attractive price, the growing popularity of cryptocurrency is a rising threat for financial institutions like Bank of America. To maintain its leading position, the bank may need to update itself according to the developments within blockchain technology.

Final thoughts

The banking sector has been Warren Buffett’s favourite industry for many years. And personally, I believe it will remain so for the coming years. And with interest rates expected to rise over the short term, both these stocks could be about to receive some beneficial tailwinds.

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Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.

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