The Best Warren Buffett Stocks to Buy for $120 Right Now

Warren Buffett has amassed a cash stash of nearly $277 billion for Berkshire Hathaway. It’s fair to say that they don’t have to worry about the share price of any stocks they buy.

Some people need to consider stock prices, though. There’s good news if you’re in that group: Berkshire Hathaway’s portfolio offers some great ideas for cash-strapped investors. Here are my picks for the three best Buffett stocks to buy under $120 right now.

1. Bank of America

You can get some of the Bank of America (BAC 0.79%) for less than $40. It is one of the largest financial services companies in the world, with a market capitalization of over $300 billion.

Should you be concerned that Buffett sold nearly 9% of Berkshire’s stake in Bank of America in the second quarter of 2024? I don’t think so. BofA still represents 11.8% of Berkshire’s portfolio. More importantly, it’s still a good stock.

Bank of America is reasonably valued in a market where many stocks are not. Its shares trade at a forward earnings multiple below 11.8. The big bank offers an attractive dividend, with a forward yield of almost 2.7%.

Of course, the prospect of the Federal Reserve cutting interest rates could cause BofA’s net interest income to fall. However, the company could also benefit from rate cuts if demand for loans increases. Over the long term, I expect an investment in Bank of America to be profitable.

2. Mitsui

It will only take $21 more of the original $120 to buy a share Mitsui (MITSF 1.10%) (MITSY 1.58%). Note, however, that the Japanese conglomerate trades through two listed stocks. One of them (ticker symbol MITSF) is much cheaper than the other (ticker symbol MITSY).

Berkshire owns stakes in five Japanese conglomerates. I could have easily picked any of the other four to include in our list. However, we chose Mitsui because it is the most attractively valued, with shares trading at a price-to-earnings ratio of just 8.3 over the past 12 months.

Buffett wrote to Berkshire Hathaway shareholders earlier this year that he expected to hold Mitsui (as well as the other four Japanese stocks) “indefinitely.” He likes the diversification these conglomerates offer, as well as the “shareholder-friendly policies” of their management teams.

I’ll add one more thing for investors to like about Mitsui: its dividend. The company’s forward dividend yield exceeds 3.1%. Its dividend payout ratio is a very low 23.5%, which indicates a lot of financial flexibility to increase the dividend in the future.

3. Occidental Petroleum

After you buy one share each of Bank of America and Mitsui, you’ll have about half of your initial $120. There’s another Buffett stock that I think is ideal to use your leftover cash to buy: Occidental Petroleum (OXY -0.35%).

Buffett continues to buy Occidental shares out of hand. It is now the sixth largest in Berkshire. I fully expect Buffett to buy even more shares of the oil and gas producer in the coming quarters.

Like Mitsui, Occidental is a stock that Buffett plans to hold “indefinitely.” He likes the company’s massive oil and gas assets in the US. The legendary investor also holds Occidental CEO Vicki Hollub in high regard. In his most recent letter to Berkshire shareholders, Buffett wrote: “Under Vicki Hollub’s leadership, Occidental is doing the right thing for both its country. and its owners”.

Western stocks should do well if oil prices rise over the next few years – something Hollub predicts will happen. The company is also a leader in the development of carbon capture and storage technology. If its efforts on this front are successful, Occidental should be a big winner over the next decade and beyond.