The Best Warren Buffett Stocks to Buy for $500 Right Now

Investors with huge portfolios can afford to focus on a stock’s valuation without thinking about a stock’s price. Warren Buffett is in that group. After all, the portfolio for which it is managed Berkshire Hathaway it sits on a cash position of $277 billion.

However, many investors have limited cash to put to work. Stock prices matter quite a bit to them.

The good news is that there are plenty of great stocks to buy if you’re on a tight budget. Several of them can be found in Buffett’s Berkshire Hathaway portfolio. Here are my picks for the best Buffett stocks to buy with $500 right now.

1. Amazon

Until a few years ago, buying just one share of Amazon (AMZN 0.91%) it would have been impossible for investors with only $500. However, the company’s 20-for-1 stock split in June 2022 made it much more affordable. Today, you can get a share for about $188.

Most Americans probably know Amazon best for its e-commerce business. The company is the 800-pound gorilla in this market, shipping millions of products around the world every day.

I expect its e-commerce business to continue to grow. However, it’s not the main reason to buy the stock, in my opinion. That honor goes to Amazon Web Services (AWS), its cloud services business.

AWS is already the market leader among cloud service providers. It contributed about 16.5% of Amazon’s total net sales in the second quarter of 2024 and nearly 70% of its operating income. With the massive headwinds generated by artificial intelligence (AI), I believe the shift in spending to the cloud will accelerate over the next decade.

2. Lennar

House builder Lennar (LEN -5.33%) it’s just a small position in Berkshire Hathaway’s massive portfolio. However, Buffett has wisely (in my view) held onto the stock. Lennar won’t break your bank either, with its stock price of about $187.

Why Buy Lennar Stock? One reason is valuation (and I don’t mean share price here). It trades at 12.8 times trailing 12-month earnings, which is well below par SPDR S&P Homebuilders ETFhis earnings multiple of 18.2.

Another important reason, however, is its strong growth prospects. A June 2024 report from Zillow said the US needs 4.5 million more homes. As one of the nation’s largest homebuilders, Lennar should benefit by helping to solve this housing shortage.

Lower interest rates should also help Lennar. The Federal Reserve’s interest rate cut will likely provide an incentive for more Americans to buy new homes.

3. Occidental Petroleum

By buying one share each of Amazon and Lennar, you’ll be left with about $125 of your initial $500. That’s enough to raise two shares Occidental Petroleum (OXY -0.75%) at about $52 each and still have some money left.

Occidental is undoubtedly one of Buffett’s favorite stocks. How do we know this for sure? First, he has been aggressively buying the oil stock since 2022. It is now the sixth largest position in Berkshire Hathaway’s portfolio. The legendary investor also wrote to Berkshire shareholders earlier this year that it was one of the few stocks he intended to hold “indefinitely.”

If you’re the type of investor who likes to “bet the jockey,” you’ll likely find Occidental attractive. Buffett praised the company’s CEO, Vicki Hollub, in the letter to Berkshire shareholders, saying she knows “how to separate the oil from the rock, and that is an unusual talent, valuable to her shareholders and her country.”

And that brings us to the main reason to buy stocks: demand for oil and gas isn’t going away. In his latest letter to shareholders, Buffett applauded Occidental for its “leadership in carbon capture initiatives.” I believe these carbon capture and storage initiatives could be a game changer for the company in the future.