The Ultimate Warren Buffett Stock to Buy With $1,000 Right Now

Many investors closely follow Warren Buffett's trades in Berkshire Hathaway's (NYSE: BRK.A) (NYSE: BRK.B) portfolio of 44 stocks for fresh investment ideas. After all, Buffett is one of the most successful stock pickers in the world, and a stock's inclusion in Berkshire's portfolio suggests it's a reliable long-term investment.

But over the past year, Berkshire has sold a lot of its top stocks -- including portions of Apple (NASDAQ: AAPL) and Bank of America (NYSE: BAC) positions -- while boosting its cash and short-term U.S. Treasury bill holdings to record levels. Those cautious moves suggested that Buffett is expecting the market to pull back from its all-time highs.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

So if you're following the Oracle of Omaha right now, you might not be eager to buy too many stocks. However, another strategy would be to simply invest in Berkshire Hathaway -- which might be the best Warren Buffett stock to buy with a modest $1,000 right now.

Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.

Why is Berkshire Hathaway the best Buffett stock to buy?

Berkshire Hathaway was a struggling textile maker when it was taken over by a young Warren Buffett's investment fund on May 10, 1965. After Buffett took control, the company liquidated its textile business; acquired a long list of insurance, railroad, and energy companies; and expanded into other markets.

It now owns well-known brands like GEICO, BNSF Railway, Dairy Queen, Fruit of the Loom, Duracell, Acme Brick, and See's Candies. Those companies generate a steady flow of cash to expand its investment portfolio, which is now worth $299 billion.

From 1965 to 2023, Berkshire Hathaway expanded its net earnings at a compound annual growth rate (CAGR) of 20% from $2 million to $96.2 billion. A $1,000 investment in the company on the day Buffett took the helm would be worth $2.48 million today. The same investment in the S&P 500 would only have grown to about $68,200.

Buffett's stable expansion of its core cash-generating businesses and shrewd investments in individual stocks enabled it to consistently beat the market. So for many decades, it made sense to simply buy and hold Berkshire's stock.

But can Berkshire keep beating the market without Buffett?

Berkshire Hathaway seems like an evergreen investment as long as Buffett remains in charge, but the 94-year-old chairman and CEO plans to hand the reins over to Greg Abel, chairman and CEO of Berkshire Energy, in the near future. Abel isn't a celebrated stock picker like Buffett, and it's unclear what will happen to Berkshire's closely watched investment portfolio once he takes over.

Charlie Munger, Berkshire's vice chairman and Buffett's longtime partner in stock picking, passed away in 2023. Moreover, Ajit Jain, who served as Berkshire's insurance chief for nearly four decades, sold more than half of his shares of the company last year. That big sale suggests the 73-year-old Jain could be getting ready to step down once Buffett retires.

Nevertheless, Buffett built Berkshire as an evergreen business, well-suited to withstand tough macro headwinds. Its total operating earnings (which exclude its investment-related gains and losses) rose 26% in 2021, 12% in 2022, and 21% in 2023 -- even as inflation, rising interest rates, and geopolitical conflicts rattled the broader markets.

Greg Abel probably won't abruptly change that resilient business model. He'll likely stick to Buffett's strategies of taking over cash-rich companies, holding its long-term investments, and carefully accumulating more undervalued stocks.

Is it the right time to buy Berkshire Hathaway's stock?

Berkshire Hathaway's stock looks historically expensive at 28 times last year's operating earnings. Five years ago, it was trading at 23 times its operating earnings for 2019. That might be why it paused its own buybacks in the third quarter of 2024.

Therefore, it might not be the best idea to invest $10,000 or $100,000 in Berkshire in this bull market. But if you don't already own Berkshire, it's not a bad idea to invest $1,000 in this evergreen company today and accumulate more shares in the future.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

• Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $361,466!*
• Apple: if you invested $1,000 when we doubled down in 2008, you’d have $46,349!*
• Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $558,625!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

Learn more »

*Stock Advisor returns as of February 3, 2025

Bank of America is an advertising partner of Motley Fool Money. Leo Sun has positions in Apple and Berkshire Hathaway. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy.