The largest stocks dominate the headlines and investors’ wallets.
So, even though I’m fond of off-the-beaten-path stocks, once a year I give my buy-or-avoid ratings on the 20 largest stocks. Today’s the day.
Berkshire Hathaway (BRK.B, $591 billion). Buy. Under CEO Warren Buffett, Berkshire owns dozens of companies, and has $327 billion in investments. In my book, no one beats Buffett.
Johnson & Johnson
Meta Platforms (META, $$377 billion). Avoid. Facebook, its flagship product, seems to be losing cachet among young people. Earnings in the June quarter were down from a year ago.
ExxonMobil (XOM, $357 billion). Buy. Exxon shares were up 45% in the past year while most stocks were down. I think the oil industry revival will continue.
Procter & Gamble
JPMorgan Chase (JPM, $320 billion). Buy. This blue chip has fallen more than 34% in the past year. Banks have their troubles, but at nine times earnings I think it’s a bargain.
Nvidia (NVDAA, $312 billion). Avoid. The Fed’s campaign of raising interest rates is poison to high-multiple stocks, and Nvidia’s multiple is 41 times earnings.
Home Depot (HD, $277 billion). Buy. I’ve had Home Depot as an “avoid” the past four years. But with the stock down to where it was eight years ago, I think it’s a value.
Bank of America
The past year has been tough for almost all stocks, and the 20 largest are no exception. A year ago, I slapped an “avoid” rating on 14 large stocks. They declined an average of 23.7%. The six stocks I recommended buying were down an average of “only” 17.1%.
Long-term my “buys” have beaten my “avoids” by the narrowest of margins, 11.4% to 11.2%. (The long-term figure covers 18 columns about the largest stocks written from 2001 through 2021.)
Bear in mind that my column results are hypothetical and shouldn’t be confused with results I obtain for clients. Also, past performance doesn’t predict the future.
Disclosure: I own Alphabet, Apple and Berkshire Hathaway personally and for most of my clients. One or more clients hold Amazon.com, Chevron, ExxonMobil, Johnson & Johnson, JP Morgan Chase, Microsoft, Nvidia, Tesla and United Health.