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6 Warren Buffett Holdings Near 52-Week Lows

- By James Li

Even though the U.S. stock market remains significantly overvalued ahead of the Memorial Day holiday, six of Berkshire Hathaway Inc.'s (NYSE:BRK.A)(NYSE:BRK.B) holdings are still trading near 52-week lows: The Kraft Heinz Co. (KHC), DaVita Inc. (DVA), Teva Pharmaceutical Industries Ltd. (TEVA), Sirius XM Holdings Inc. (SIRI), American Airlines Group Inc. (AAL) and Bank of New York Mellon Corp. (BK).


US market remains significantly overvalued despite Dow's troubles

The Dow Jones Industrial Average declined 1% during the week before Memorial Day, reporting its fifth-straight weekly loss. The five-week period represents the longest losing steak since 2011. Top Berkshire holding Apple Inc. (AAPL) closed at $178.97, down 0.38% from the previous close.

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CNBC columnist Fred Imbert said the ongoing trade war between the U.S. and China sparked trepidation among investors that the economy is slowing down. Edward Jones strategist Kate Warne added that although the two countries are still expected to reach a trade deal, the negotiations are becoming "more difficult" than investors thought a few weeks ago.

Despite the trade war, Warren Buffett (Trades, Portfolio)'s favorite market indicator stood at 139.9%, approximately 4.5% lower than its May 1 level of 144.4% yet still above the "significant overvaluation" threshold of 115%. Based on this market level, the expected market return over the next eight years is -1.8% per year.

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Several of Buffett's holdings are still new 52-week lows

GuruFocus' 52-week low screener lists the companies that are trading near annual lows. Robert Rodriguez, the former CEO of First Pacific Advisors (Trades, Portfolio) and portfolio manager of the FPA Capital Fund (Trades, Portfolio), seeks such companies as part of one of his investing strategies.

Each of our guru pages contains a "52-week Lows" section within the "Current Portfolio" tab. Premium members can view each guru's holdings that are trading near annual lows. The website listed six such holdings for Buffett.

Kraft Heinz

Kraft Heinz, the company known for products like Heinz Ketchup, closed at $31.11. The stock is trading approximately 0.03% from its 52-week low of $31.10.

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GuruFocus ranks the Pittsburgh-based company's profitability 6 out of 10: Although the profit margins and returns outperform over 80% of global competitors, Kraft Heinz's three-year revenue growth rate of 12.90% is underperforming 85.06% of global packaged food companies. Although the company's total revenue increased over the past five years, its revenue per share has declined over the same period.

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Berkshire owns 325,634,818 shares as of March 2019, the latest portfolio date. With a portfolio weight of 5.33%, Kraft Heinz represents the conglomerate's sixth-largest holding.

DaVita

DaVita, a major kidney dialysis provider, closed at $47.56. The stock is trading approximately 0.32% from its 52-week low of $47.61.

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GuruFocus ranks the Denver-based company's financial strength 4 out of 10: Although it has a strong Piotroski F-score of 6, DaVita's Altman Z-score of 1.21 and debt-to-equity ratio of 2.70 suggest possible financial distress. Despite this, DaVita's profitability ranks 7 out of 10 on positive signs like expanding profit margins and a three-star GuruFocus business predictability rank.

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Teva

Teva, a major Israeli drug manufacturer, closed at $10.87. The stock is trading approximately 0.46% from its 52-week low of $10.88.

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GuruFocus ranks Teva's profitability 5 out of 10: Although the company's operating margin outperforms 78.4% of global competitors, its three-year revenue decline rate of 1.40% underperforms 75.47% of global drug manufacturers.

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American Airlines

American Airlines, a major airline based in Dallas, closed at $29.17. The stock is trading approximately 1.42% from its 52-week low of $28.81.

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GuruFocus ranks the airline's profitability 7 out of 10: Even though American's net margin and return on assets underperform 64% of global competitors, its three-year revenue growth rate of 2.80% outperforms 85.51% of global competitors. Other positive signs include a strong Piotroski F-score of 7 and a price-sales ratio near a five-year low.

Sirius

Sirius, a major satellite ratio broadcasting provider, closed at $5.41. The stock is trading approximately 1.69% from its 52-week low of $5.33.

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GuruFocus ranks the New York-based company's financial strength 5 out of 10: Although Sirius has a strong Piotroski F-score of 7, its Altman Z-score suggests possible financial distress and the Beneish M-score suggests possible earnings manipulation. Despite this, Sirius' profitability ranks 9 out of 10 on positive signs like expanding profit margins and a three-year revenue growth rate that outperforms 83.85% of global competitors.

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Bank of New York Mellon

Bank of New York Mellon, a New York-based regional bank, closed at $45.16. The stock is trading approximately 3.50% from its 52-week low of $43.67.

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GuruFocus ranks the regional bank's financial strength 4 out of 10 on several weak indicators, which include a debt-to-equity ratio and an equity-to-asset ratio that underperform 71.05% and 92.67% of global competitors. Additionally, Bank of New York Mellon's Beneish M-score suggests possible earnings manipulation.

Disclosure: No positions.

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This article first appeared on GuruFocus.