3 Warren Buffett Stocks to Buy Hand Over Fist in November

Warren Buffett is a legendary investor who needs little in the way of introduction. Since he took over Berkshire Hathaway in 1965, shares in the Omaha-based holding company have generated annualized returns of nearly 20%. Although Berkshire owns numerous individual businesses, much of Berkshire's gains have come from the profits generated from its stock market investments.

According to Berkshire Hathaway's most recently submitted Form 13F filing with the Securities and Exchange Commission (SEC), Berkshire owns stakes in nearly 40 U.S.-listed public companies. The company also holds significant investments in international stocks, particularly Japanese stocks.

The key strategy behind Warren Buffett investments is to buy "wonderful businesses at fair prices." But in the case of the following three stocks, not only does each one represent a high-quality business, they're currently out of favor on Wall Street.

These three stocks -- DaVita (NYSE: DVA), Kraft Heinz (NASDAQ: KHC), and Pool Corporation (NASDAQ: POOL) -- may have the potential for outsized gains, as market sentiment shifts back to bullish.

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Current sentiment about DaVita belies its long-term potential

DaVita owns and operates a network of kidney dialysis centers. Berkshire Hathaway owns 42.6% of the company, and has been a DaVita investor for more than a decade. However, despite it having this continued Buffett seal of approval, Wall Street has taken a bearish stance on the company.

Various issues have contributed to this, but the main issue has been disappointing quarterly results. Because of this negative market sentiment, DaVita now trades for just 10 times forward earnings. Compared to near-term growth forecasts, this is a heavily discounted valuation. Sell-side analysts estimate that the company will report earnings growth of 11% and 17%, respectively, in 2025 and 2026.

Although the company's aggressive share repurchase efforts play a big role in this, organic growth overseas is another factor at play regarding this earnings growth. Long-term, DaVita has other tailwinds, such as the increasing number of Americans with chronic kidney disease.

Collect a high dividend yield with Kraft Heinz, ahead of its restructuring

Berkshire Hathaway has had a 27.5% stake in Kraft Heinz for many years. This investment in the packaged foods giant has been a bit of a value trap for Buffett, but that doesn't mean you should necessarily avoid this stock.

Why? For one, while Buffett himself may admit Berkshire overpaid for its stake in the company, today you can get in at a very low valuation. Today, the stock trades for only 9 times forward earnings. This represents a discount to peers like General Mills and Kellanova, which trade at forward price-to-earnings (P/E) ratios of 14 and 21, respectively.

There's also a planned split-up of Kraft Heinz into two separate public companies. This could help unlock value, much like a split-up did for Kellanova's corporate predecessor, Kellogg. In the meantime, ahead of this restructuring, you can collect Kraft Heinz's juicy quarterly cash dividend. At recent prices, the stock's forward dividend yield is more than 6.5%.

Pool Corp. is a recent Buffett buy with long-term growth potential

Over the past year, Berkshire Hathaway built up a 9.2% stake in Pool Corp., which is in the business of providing pool construction materials and pool maintenance supplies. Weak demand for new pools has depressed earnings. Over the trailing 12-month (TTM) period, earnings per share (EPS) came in at just under $11.

Compare that to 2021-2023, when annual EPS was averaging $16. At around 27 times forward earnings, Pool Corp's valuation appears to account for the prospect of a recovery. However, once new pool demand normalizes, a steady increase in home pools could bode well for the company's pool maintenance product sales.

This steady growth could help sustain Pool's valuation, with shares continuing to rise in line with earnings growth. In turn, steady earnings growth could also mean that this company will retain its status as an emerging dividend growth stock. Over the past 14 years, the company has raised its dividend. Shares currently have a forward dividend yield of 1.75%.

Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.