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Warren Buffett's Picks: 1 Stock to Buy Aggressively and 1 to Avoid Like the Plague

Harrison BrooksSunday, May 11, 2025 4:46 am ET
81min read

As the oracle of Omaha continues to navigate volatile markets, Berkshire Hathaway’s Q1 2025 portfolio shifts reveal both opportunities and caution. With cash reserves swelling to a record $342 billion and net sales hitting $1.5 billion, Buffett’s moves underscore a disciplined strategy. Here’s what investors should buy hand over fist and avoid entirely based on his latest actions.

1 Stock to Buy: Apple Inc. (AAPL) – The Core of Berkshire’s Future

Apple remains Berkshire’s largest holding at $60.27 billion, a testament to Buffett’s enduring faith in its dominance and cash flow. Despite trimming its stake slightly from its peak, Apple’s position as a cash generator—$100 billion in free cash flow in 2023—aligns perfectly with Buffett’s preference for companies that thrive in both bull and bear markets.

AAPL Closing Price

Why buy now?
- Valuation: Apple trades at 28.5x forward earnings, below its 10-year average of 31.5x, offering a margin of safety.
- Dividend Strength: A 1.2% yield paired with consistent hikes makes it a cash cow.
- Buffett’s Track Record: His Apple stake has returned 218% since 2016, outperforming Berkshire’s overall portfolio.

The CEO’s recent emphasis on AI and services growth (accounting for 33% of revenue) further justifies long-term optimism.

Ask Aime: What should investors do with Apple now?

1 Stock to Avoid: DaVita Inc. (DVA) – The Strategic Exit

Berkshire sold $148 million of DaVita shares in Q1 2025 to avoid crossing the 45% ownership threshold—a regulatory redline that could trigger costly reporting requirements. While this move was defensive, the sale hints at underlying concerns about DaVita’s trajectory.

HCA, VNRX, CHTR, DVA Closing Price

Why avoid?
- Valuation Risks: DaVita’s P/E ratio of 22.4x exceeds its 5-year average of 18.7x, with margins pressured by rising healthcare costs.
- Operational Challenges: The dialysis provider faces regulatory scrutiny and declining reimbursement rates, squeezing profits. Its Q4 2024 net income dropped 15% YoY to $249 million.
- Buffett’s Playbook: Selling a stake in a once-high-conviction stock signals diminished confidence.

Conclusion: Follow Buffett’s Lead, Not Just His Holdings

Berkshire’s portfolio highlights a stark divide between defensive cash retention ($342 billion in reserves) and strategic bets on high-quality companies. Apple’s position as the top holding—and its alignment with Buffett’s “moat” philosophy—makes it a buy. Conversely, DaVita’s sale underscores that even top holdings can falter if fundamentals weaken.

Investors should focus on:
- Apple’s enduring dominance in tech and services.
- Avoiding stocks where Berkshire reduces stakes without clear catalysts for turnaround.

As Buffett himself warns: “Risk comes from not knowing what you’re doing.” In this case, buying Apple and avoiding DaVita is a playbook even novices can follow.

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Mr_Biddz
05/11
Dropped $148M like DaVita's hot potato. Regulatory headaches ain't worth the dip. Smart play by Berkshire.
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Ilabaca1
05/11
@Mr_Biddz Smart move, avoiding regulatory drama.
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jtg2s
05/11
@Mr_Biddz DaVita's P/E too high, good riddance.
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The_Sparky01
05/11
$AAPL at 28.5x forward earnings? Bargain basement price for a cash cow with a golden yield. 🤑
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DestinyMaker_
05/11
@The_Sparky01 How long you think $AAPL can keep growing?
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greyenlightenment
05/11
$AAPL undervalued, solid buy with strong moat.
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shakenbake6874
05/11
DaVita's got problems, peeps. Margins squeezed, regulatory issues... not my bag. Better sippin' apple juice with $AAPL.
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josemartinlopez
05/11
$DVA trapped in high costs, no easy fix.
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Jera_Value
05/11
Buffett's playbook: Buy $AAPL, avoid $DVA trouble.
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krogerCoffee
05/11
Buffett's moves got me thinkin'. Cash is king, but $DVA ain't doin' royal treatment. Time to pivot?
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mrdebro44
05/11
DaVita's margins squeezed, might bleed more soon.
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CarterUdy02
05/11
Apple's free cash flow is 💰. With Buffett backing, it's a no-brainer for long-term gains.
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BrockDiggles
05/11
Damn!!the block option data in META stock saved me much money!
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James___G
05/11
Apple's cash flow is 💰, perfect for long-term hold.
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