Is Berkshire Hathaway Stock a Buy Now?
Saturday, Feb 1, 2025 7:02 am ET
As an investor with a keen eye on the market, I've been keeping a close watch on Berkshire Hathaway (BRK.B) stock, and I believe now is an opportune time to consider adding it to your portfolio. With a market cap of $916.34 billion, Berkshire Hathaway is the world's 9th most valuable company, and its stock has been on a tear, up 25.49% in 2024 alone. But is it still a buy now? Let's dive in and find out.
First, let's address the elephant in the room: Warren Buffett, the legendary investor and Berkshire Hathaway's chairman, is 93 years old. While his age may raise concerns about the company's future leadership, Buffett has repeatedly stated that he has no plans to retire anytime soon. Moreover, Berkshire Hathaway's management team is deep and talented, with several potential successors ready to take the helm when the time comes.
Now, let's talk about the company's financial performance. Berkshire Hathaway's revenue has been growing steadily, up 27.09% from 2021 to 2024. Its earnings per share (EPS) have also been on the rise, increasing by 38.42% over the same period. These strong financials indicate that the company is well-positioned for continued growth.
Berkshire Hathaway's stock performance has been impressive as well. Its total return over the past 12 months is 24.46%, outpacing the S&P 500 ETF (SPY) total return of 25.17%. Additionally, Berkshire Hathaway's annual returns have consistently outperformed its industry peers and the broader market. For example, in 2024, its annual return was 25.49%, while the average annual return for its industry peers was around 15.77%.
Another attractive aspect of Berkshire Hathaway is its dividend. The company has increased its annual dividend for the 59th consecutive year, and its current dividend yield is around 1.40%, which is higher than the average dividend yield of its industry peers (around 1.20%) and the S&P 500 ETF (SPY) dividend yield (around 1.30%).
Now, let's talk about valuation. As of July 12, 2024, Berkshire Hathaway's P/E ratio was 24.02, which is relatively low compared to the average P/E ratio of the S&P 500 index. A low P/E ratio can indicate that the stock is undervalued or that the market has low expectations for the company's future earnings growth.
In conclusion, Berkshire Hathaway stock appears to be an attractive investment opportunity. Its strong financial performance, impressive stock performance, consistent dividend growth, and relatively low valuation make a compelling case for adding it to your portfolio. However, as with any investment, it's essential to do your own research and consider your risk tolerance before making a decision.