6 Stocks Berkshire Hathaway Should Buy With Its DirecTV Profits

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The stocks Warren Buffett should consider using his DirecTV profits to buy

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6 Stocks Berkshire Hathaway Should Buy With Its DirecTV Profits

  1. 1. 6 Stocks Berkshire Hathaway Should Buy With Its DirecTV Profits
  2. 2. Ford Motor Co. (NYSE: F)
  3. 3. Ford Motor Co. (NYSE: F) • P/E Ratio: 9.9 • Dividend: 3.2% • 3-year projected annual earnings growth rate: 12.9%
  4. 4. Why Berkshire Should Buy Ford • Ford has historically been the most stable U.S. automaker, and was by far the most financially sound during the crisis years. • The company has excellent brand recognition and has done an excellent job of bringing its focus back to its core operations by selling the Jaguar and Land Rover brands • Despite trading for less than 10 times earnings, Ford is expected to grow impressively over the next few years
  5. 5. Apple (NASDAQ: AAPL)
  6. 6. Apple (NASDAQ: AAPL) • P/E Ratio: 14.4 • Dividend: 2.2% • 3-year projected annual earnings growth rate: 9.1%
  7. 7. Why Berkshire Should Buy Apple • Apple has about $160 billion in available cash, and a very ambitious plan to return cash to shareholders • Buffett has publicly praised Apple’s management, saying “they’ve done a pretty good job of running the company.” • Excluding cash, Apple trades for just 10 times earnings • Apple is simply an excellent value at the current share price with annual growth of nearly 10% expected over the next several years • In fact, some analysts who cover Apple are projecting growth rates as high as 17% • If Apple releases another game-changing product like the iPhone, iPad, and iPod were, the upside potential is huge • Downside risk is limited by the stockpile of cash, as well as incredibly strong iPhone and iPod sales
  8. 8. Transocean (NYSE: RIG)
  9. 9. Transocean (NYSE: RIG) • P/E Ratio: 9.7 • Dividend: 5.4% • 3-year projected annual earnings growth rate: N/A
  10. 10. Why Berkshire Should Buy Transocean • Although it is expecting earnings to contract slightly, Transocean still trades for an excellent value • The company is planning to spin off some of its European operations into a separate entity, which activist investor Carl Icahn believes will increase Transocean’s value significantly • At 5.4%, Transocean pays an excellent dividend, which is very sustainable since it represents less than half of the company’s profits
  11. 11. TD Bank N.A. (NYSE: TD)
  12. 12. TD Bank N.A. (NYSE: TD) • P/E Ratio: 14.4 • Dividend: 3.6% • 3-year projected annual earnings growth rate: 8.1%
  13. 13. Why Berkshire Should Buy TD Bank • Warren Buffett loves companies with durable competitive advantages, and TD Bank definitely has one. • Known as “America’s Most Convenient Bank”, because of its very convenient hours • Many branches are open 7 days a week • Drive through banking is available until midnight in many locations • TD’s branches close only 7 days every year!
  14. 14. Gap Inc. (NYSE: GPS)
  15. 15. Gap Inc. (NYSE: GPS) • P/E Ratio: 15.1 • Dividend: 2.2% • 3-year projected annual earnings growth rate: 10.9%
  16. 16. Why Berkshire Should Buy Gap • Gap’s share price is actually lower than it was a year ago, mainly due to weakness in the sector, even though their business is thriving • In fact, Gap is projected to have double-digit earnings growth in the next few years • The company is doing an excellent job of growing online sales, as well as expanding into international markets, especially Asia • Gap’s dividend has more than doubled since 2010, but still represents a payout ratio of only 27% of the company’s earnings
  17. 17. AT&T (NYSE: T)
  18. 18. AT&T (NYSE: T) • P/E Ratio: 10.6 • Dividend: 5.2% • 3-year projected annual earnings growth rate: 5%
  19. 19. Why Berkshire Should Buy AT&T • The most logical choice for Berkshire may be to simply keep the AT&T shares it will receive as part of the DirecTV deal • According to Standard & Poor’s, the deal will produce about $1.6 billion in cost synergies for AT&T, as well as increase its presence in Latin America and grow its television customer base. • If Berkshire’s management did indeed believe in DirecTV long-term, the company should get even stronger as part of the AT&T family. • At 5.2%, AT&T pays an excellent dividend, which it has an excellent history of increasing
  20. 20. Photo Credits • Ford Mondeo: wikimedia/Thesupermat • Gap: wikimedia/Dorsetdude • TD Bank: wikimedia/Mbisanz • All other photos are in the public domain
  21. 21. Warren Buffett Just Bought 9 Million Shares of This Company

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