Wall Street Thinks This Stock Could Make Warren Buffett the Most Money Over the Next 12 Months

Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) owns shares of nearly 50 stocks, but Warren Buffett didn’t personally pick all of them. A few positions were initiated by Berkshire’s investment managers.

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Wall Street Thinks This Stock Could Make Warren Buffett the Most Money Over the Next 12 Months

However, Buffett could profit from any of the stocks in Berkshire’s portfolio. Some are likely to be much bigger winners than others. Wall Street thinks this stock could make Buffett the most money over the next 12 months.

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Ruling out some top contenders

Before we get to that potential biggest moneymaker, let’s rule out some of the top contenders. Analysts don’t believe that several of the stocks many might guess would generate the biggest gains for Buffett will move the needle enough.

For example, Apple (NASDAQ: AAPL) ranks as Berkshire’s biggest single holding, by far. It wouldn’t be surprising, therefore, if it made Buffett the most money over any given period. 

However, the consensus price target for Apple stock reflects an upside potential of less than 3%. Even the highly anticipated announcement of Apple’s mixed-reality headset hasn’t excited analysts enough to affect their price targets. 

What about Occidental Petroleum (NYSE: OXY)? Buffett is buying the oil stock more aggressively these days than any other. Berkshire now owns nearly 25% of Oxy.

Wall Street is certainly bullish about Occidental. The average analyst’s 12-month price target is roughly 17% above the current share price. But while an increase of that much would make Berkshire more than $2 billion in gains, Occidental still isn’t the stock Wall Street has in mind.

Take it to the bank

I won’t prolong the suspense. The one stock that Wall Street thinks will make Buffett the most money over the next 12 months is… Bank of America (NYSE: BAC).

The consensus price target for Bank of America, Berkshire’s second-largest position, reflects an upside potential of around 23%. With Berkshire’s stake in BofA currently worth over $30 billion, a 23% increase would make the company nearly $7 billion.

This amount, by the way, doesn’t include any dividend income Berkshire should make with the bank stock. Bank of America currently pays an annualized dividend of $0.88 per share. Since it owns over 1.03 million shares, it stands to receive nearly $910 million in dividends over the next 12 months.

Why are analysts so upbeat about Bank of America? One big reason is the stock is dirt cheap right now. After being hammered by the banking crisis earlier this year, BofA shares trade at a forward earnings multiple of below 8.4. 

But the bank’s financial position remains strong. Its management team is top-notch and the company stands out as one of the leading technological innovators in the banking sector.

Wall Street knows all of this. They realize that BofA’s decline should only be a temporary one.  

Beyond 12 months

Which stock is likely to make Buffett the most money over a longer period than 12 months — say five to 10 years? Analysts won’t help us with that question. However, I have a pretty good guess — and I don’t think it’s Bank of America.

I recently predicted that Amazon and Occidental will be Buffett’s biggest winners this decade. Neither will be his biggest moneymaker, though. That honor will go to Apple, in my view.

Berkshire’s massive stake in Apple means that the stock doesn’t have to move very much to generate a lot of money for the conglomerate. I’m optimistic about Apple’s long-term growth prospects. Barring some dramatic change in Berkshire’s stake in the company, I expect that Apple will easily be Buffett’s biggest moneymaker over the next five to 10 years.

But I agree with Wall Street about Bank of America. It probably will make the Oracle of Omaha the most money over the shorter term. And it could make investors who aren’t multibillionaires money, as well.


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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Keith Speights has positions in Amazon.com, Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has positions in and recommends Amazon.com, Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy.

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