Banking, finance, and taxes
Buffett & Berkshire Stocks With Most Upside in 2010 (BRK-A, BAC, COP, CMCSA, GCI, GE, IRM, KFT, NRG, STI, USB, WFC)
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Warren Buffett has a different timeframe than most investors. Unless he sees something drastic to the long-term fundamentals, he maintains a near-forever outlook when he invests in or buys companies for Berkshire Hathaway Inc. (NYSE: BRK-A). What we wanted to do was peruse the Warren Buffett and Berkshire Hathaway portfolio of common stock holdings and then see which stocks of the portfolio had the most implied upside in 2010 compared to consensus analyst price targets. The stocks which made the screen are Bank of America Corporation (NYSE: BAC), ConocoPhillips (NYSE: COP), Comcast Corporation (NASDAQ: CMCSA), Gannett Co., Inc. (NYSE: GCI), General Electric Co. (NYSE: GE), Iron Mountain Inc. (NYSE: IRM), Kraft Foods Inc. (NYSE: KFT), NRG Energy, Inc. (NYSE: NRG), SunTrust Banks, Inc. (NYSE: STI), US Bancorp (NYSE: USB), and Wells Fargo & Company (NYSE: WFC).
Many value investors chase the Buffett stocks, and that full list of latest holdings is here. What we looked for was the current price (late morning stock price snapshot on Wednesday 12/30/2009), the 1-year mean price target from Thomson Reuters, and what the implied upside was for these stocks to the mean price target. Lastly, we have offered some analysis on each stock to explain the upside or for expanded coverage ahead.
Bank of America Corporation (NYSE: BAC) $14.99 and 1-year mean price target is $21.11, implying upside of 40%.
ConocoPhillips (NYSE: COP) $50.67 and 1-year mean price target is $58.50, implying upside of 15.5%.
Comcast Corporation (NASDAQ: CMCSA) $17.02 and 1-year mean price target is $19.45, implying an upside of 14.2%.
Gannett Co., Inc. (NYSE: GCI) $14.95 and 1-year mean price target is $17.20, implying upside of 15%.
General Electric Co. (NYSE: GE) $15.29 and 1-year mean price target is $17.33, implying upside of 13.3%.
Iron Mountain Inc. (NYSE: IRM) $23.00 and 1-year mean price target is $33.50, implying upside of 45.6%.
Kraft Foods Inc. (NYSE: KFT) $27.42 an
d 1-year mean price target is $31.90, implying upside of 16.3%.
NRG Energy, Inc. (NYSE: NRG) $23.92 and 1-year mean price target is $30.08, implying upside of 25.7%.
SunTrust Banks, Inc. (NYSE: STI) $20.20 and 1-year mean price target is $23.73, implying upside of 17.4%.
US Bancorp (NYSE: USB) $22.31 and 1-year mean price target is $27.07, implying upside of 21.3%.
Wells Fargo & Company (NYSE: WFC) $26.55 and 1-year mean price target is $32.08, implying upside of 20.8%.
There are a few issues to note here. First and foremost, with 4 of the 11 stocks with the most implied upside being banks the ‘formal’ targets are obviously up for grabs. Many do not trust consensus data on big financial stocks and there are many who discount the earnings and price target data entirely.
Another issue to note is that with this data being from Thomson Reuters it can always have a lag to it as consensus analyst price targets are sometimes slower to catch up on public sources than consensus earnings or revenue data.
Another issue to consider is whether Buffett will get any closer to naming a replacement. Each year this becomes a larger and larger speculated issue after the new year and each year so far it is something which will be addressed down the road. It is obvious that Warren does not want to hang up his badge, so unless he has a health issue arise we won’t spend much time on that issue.
Lastly, we took all opinion out of this except for in the conjecture provided on each stock. This was going to be a 10-stock list, but we did not want to see 4 of 10 be in banking.
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JON C. OGG
DECEMBER 31, 2009
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