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

Warren Buffett doesn’t offer investors a newsletter that lists the stocks he likes. But he doesn’t have to. Berkshire HathawayHis portfolio features all the stocks that Buffett likes so much that he put the conglomerate’s money on the line.

Not every stock in Berkshire’s portfolio is a great choice to buy in the context of current market dynamics. A few of them are, though. Here are my picks for the three best Buffett stocks to buy for $500 right now.

1. Lennar

Lennar (LEN 0.44%) is one of two homebuilder stocks that Buffett owns. However, it’s the only one with a stock price (currently around $188) that’s affordable on a $500 budget.

Why buy Lennar stock right now? There are two main reasons — one short-term and the other long-term.

The short-term reason is that the Federal Reserve is cutting interest rates for the first time since 2020. Co-CEO Stuart Miller said on Lennar’s second-quarter earnings call that rate cuts could activate “pent-up demand.” He is almost certainly right.

Lennar has been quite successful in recent years with high interest rates. However, the lower rates are great news for the company.

The longer-term reason to buy stocks is the US housing shortage. As one of the nation’s largest homebuilders, Lennar is well-positioned to help alleviate this supply-demand imbalance.

2. Louisiana-Pacific

Louisiana-Pacific (LPX 0.88%) was one of the stocks Buffett sold in Q2. However, I think it’s a great stock to buy now. And with a share price of around $107, it’s affordable for cash-strapped investors.

The company is a leading provider of construction solutions. Its best-selling product is engineered wood siding, which generated 51% of total revenue in 2023. About 40% of LP’s revenue comes from oriented strand board, a less expensive alternative to plywood.

As you might expect, Fed rate cuts should be good for the LP business for the same reason they’re good for Lennar. The chronic housing shortage in the US should also work to LP’s advantage over the next decade.

LP’s price-to-earnings-growth (PEG) ratio based on five-year earnings growth forecasts is just 0.78, based on data from LSEG. Any PEG multiple below 1.0 is considered to be an attractive valuation.

3. Amazon

After you buy one share each of Lennar and Louisiana-Pacific, you’ll have about $206 left of your original $500. That’s more than enough to get a share of another exceptional Buffett stock — Amazon (AMZN -0.64%).

Lower interest rates could lead to increased consumer spending. That could be music to the ears of Amazon, which operates the world’s largest e-commerce platform. Amazon Web Services (AWS), the leading cloud service provider, could also help. Lower rates reduce costs for companies to invest in growth projects, including technology infrastructure.

Even without the Fed’s moves, AWS should be a major growth driver for Amazon over the next decade and beyond. Currently, less than 15% of global IT spending is in the cloud, with the rest on premises. Amazon CEO Andy Jassy expects those numbers to reverse in the next few years.

Artificial intelligence (AI), especially generative AI, will likely add fuel to the fire of this migration to the cloud. Jassy noted in Amazon’s Q2 earnings call that “companies of all sizes are excited about using AI.”

Over the years, Amazon has been good at expanding into new markets, with AWS being a prime example. Look for more growth from the company as it moves into satellite Internet services with the launch of its Kuiper Low Earth Orbit satellite constellation.