Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial), the big fund with the biggest reputation for investing in value, now owns more than 30 stocks, but only a few of them have price-earnings ratios that are below the market average. In the interest of identifying what may be the best value found these days by Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio), here are the three stocks with the lowest price-earnings ratios in the Berkshire Hathaway fund right now.
General Motors
General Motors (GM, Financial) has a price-earnings ratio of just 8. Now focusing on making electric vehicles like almost every other auto manufacturer that wants to remain relevant, the Detroit, Michigan-based automaker is one of the oldest and best known brands in the world. Chevrolet, Buick, Cadillac – General Motors continues to make them and sell them worldwide. To Warren Buffett (Trades, Portfolio), it’s something like the Coca Cola (KO, Financial) of the car industry.
General Motors has a market capitalization of $88.71 billion and an enterprise value of $174.71 billion. The price-book ratio is low as well at 1.69.
The company has lots of debt. Here’s the GuruFocus summary of General Motors' financial strength:
General Motors no longer pays a dividend. Analysts seem to like the stock right now. Citigroup (C, Financial) recently issued a “buy” on it and Wells Fargo (WFC, Financial) recently moved it to “overweight” in their rankings.
Itochu Corporation
Itochu Corporation (ITOCF, Financial) trades on the over-the-counter market in the U.S. with a price-earnings ratio of 8. The company, which is involved in textiles, machinery and metals, has a market capitalization of $45.44 billion. This big Japanese conglomerate has a relatively low price-book ratio of 1.38. The price-sales ratio is just 0.46.
The GuruFocus summary of Itochu’s financials shows four good signs, five medium warning signs and four severe warning signs. Here’s how it looks:
Itochu pays a 2.6% dividend yield. The stock makes up about 0.7% of the Berkshire Hathaway portfolio.
Verizon
Verizon Inc.’s (VZ, Financial) price-earnings ratio is 10. The big telecommunications firm amounts to 2.4% of the Berkshire Hathaway portfolio. Market capitalization for Verizon comes in at $223 billion with an enterprise value of $391 billion. The price-book ratio is 2.86.
Earnings per share are off this year by 760%. EPS growth for the past five years is also negative, with an average annual decline of 0.30%. Wall Street expects earnings to return to growth next year and for the next five years.
GuruFocus’ summary of Verizon’s financials finds three good signs, three medium warning signs and three severe warning signs:
Verizon pays a 4.76% dividend yield.
Those are the three stocks with the lowest price-earnings ratios now owned by Berkshire Hathaway. It seems Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio) might see some real value in these equities, as troubled as the companies may seem at first glance.
