Currently, the S&P 500 index is hovering near its all-time peak, and short-term market indicators remain unclear with the recent implementation of U.S. tariff policies.
Billionaire investor Warren Buffett, CEO of Berkshire Hathaway, sold a staggering $134 billion in stocks during 2024. This move is seen as a significant indicator for investors, as historically, when Buffett’s firm sells off, it often leads to underperformance in the market. This trend leads many to speculate potential market difficulties in 2025. Given the current market uncertainty, stocks favored by billionaire investors may offer appealing opportunities.
During a recent interview with CNBC, Chris Grisanti, Chief Market Strategist at MAI Capital Management, emphasized the importance of recognizing market signals and valuations to navigate the investment landscape effectively. He pointed out that entry prices are vital, particularly as the gap between growth and value stocks has widened significantly. Grisanti noted that the recent market corrections, largely influenced by tech stocks, represent a natural and necessary market adjustment.
Grisanti remarked that the market decline stems from poorer performance in sectors sensitive to the economy, including banks, airlines, and consumer discretionary stocks, which hints at a potential economic slowdown. Additionally, he mentioned how President Trump’s tariff policies could pose challenges to the economy, with local businesses feeling the effects of elevated tariffs.
British economist John Ross elaborated in a recent interview that Trump’s tariffs are likely to have detrimental effects on the U.S. economy, stating, “The only question with these tariffs is which set of adverse outcomes you will experience.”
Leon Cooperman, another billionaire investor, shared his view on CNBC’s Squawk Box, recognizing that while the president’s intentions to reduce the deficit are commendable, his methods may be unsettling. “Reducing the deficit is the right approach,” Cooperman stated.
5 Most Profitable Industries in America in 2024: Bank of America Corporation (NYSE:BAC) as a Consideration Among Affordable Stocks
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Our Approach
In identifying the best affordable stocks endorsed by billionaires, we utilized Insider Monkey’s exclusive database that tracks billionaire stock holdings. We selected stocks with a forward P/E ratio under 15 and ranked them based on the number of billionaire investors. Stocks with equal billionaire investor counts were further ranked by their forward P/E ratios.
Why are we focusing on stocks backed by hedge funds? The rationale is straightforward: our research indicates that emulating the top stock selections of leading hedge funds can yield superior market performance. Our quarterly newsletter strategy has selected 14 small-cap and large-cap stocks each quarter, achieving a return of 373.4% since May 2014, outpacing benchmarks by 218 percentage points.
Forward P/E Ratio: 11.20
Number of Billionaire Investors: 18
Bank of America Corporation (NYSE:BAC) functions as a financial and banking holding company, operating in sectors such as Consumer Banking, Global Wealth and Investment Management (GWIM), Global Banking, and Global Markets. Its substantial economic moat contributes to its competitive advantage and operational resilience, with revenues around $102 billion in 2024 and assets totaling $3.3 trillion.
On March 7, Baird analyst David George upgraded BAC from Neutral to Outperform, raising the price target from $45 to $50. This optimistic assessment stems from factors such as BAC’s consistent performance, low credit risk, and strong market presence.
In 2024, Bank of America’s Consumer Banking division accounted for approximately $11 billion, or 40% of the company’s earnings. In Q4 2024, this division achieved a net addition of over 200,000 checking accounts and marked six consecutive years of quarterly growth. The bank is focused on enhancing its digital capabilities and maintaining disciplined deposit pricing while aiming for continued growth in consumer loans.
Overall, BAC ranks 8th in our analysis of affordable stocks favored by billionaires. While we see potential in BAC as an investment, we believe that AI stocks might offer greater opportunities for higher returns in a shorter time frame. For those interested in AI stocks that are potentially more advantageous than BAC and priced below 5 times their earnings, check out our report on the cheapest AI stock.
