Warren Buffett (Trades, Portfolio) will probably go down in the history books as one of the best investors of all time. The man is still sharp at the age of 92. Though he will not be around at Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial) forever, his lessons and values will carry on at the conglomerate for many decades to come. Berkshire has a successor in place (for quite some time now), and you can bet that he has been trained very well by the likes of Buffett and his long-time business partner Charlie Munger (Trades, Portfolio).
Some skeptics may stand to knock Buffett's long-term approach to investing or Berkshire's style, but they have invested through many types of environments and have been able to get up any time the economy has sunk into a funk. In my opinion, Buffett and Berkshire are still the heavyweight champs when it comes to value investing.
Indeed, the 2020 and 2021 surge in broader stock markets had many new investors overlooking Berkshire's slow and steady approach. Stocks blasted off, and the more speculative (or exciting) a name, the more gain there was to be had until the tech sector eventually peaked, dragging nearly everything lower in 2022.
Berkshire Hathaway beat the market in 2022. Could more of the same be ahead?
The 2022 bear market saw the tables turn in a massive way. Suddenly, Buffett and his colleagues at Berkshire were, once again, seen as the brilliant people they are. They stayed disciplined, as always, and kept their emotions in check, allowing them to outperform the broader markets as the bear made an appearance.
Though Berkshire topped the S&P 500 last year, I think it is too early in the game to say Berkshire is back to its market-beating ways. As market volatility continues on, though, I do view Berkshire as a modestly priced stock at current levels. Whether this translates to another year of superior results, though, remains to be seen.
As Berkshire moves forward, I think investors would be wise to reconsider their investment strategies by focusing more on the long term rather than chasing. 2022 will be a painful reminder for many investors, but it is far better to face a setback earlier in your journey than later.
In this discussion, I will take a peek at one wonderful stock within Berkshire Hathaway's portfolio that I think is trading at a very reasonable price at the time of writing. Though shares may not be in deep-value territory, I do view the play as a worthy stock to stash on your watchlist as the economy looks to wander into a recession.
Apple: Berkshire's top bet may be worth watching as the tech rally picks up steam
Apple Inc. (AAPL, Financial) is a tech titan that has been on a hot start this year, soaring around 35% year to date. As the company continues pushing closer to that $3 trillion market cap mark (and new devices, perhaps?), I do think Berkshire's investment in Apple will continue to pay huge dividends.
In recent quarters, we have heard a lot of chatter about what could be next to come out of the Apple pipeline. The company is certainly overdue for a new product launch. And it has been hard to steer clear of the rumors and reports of a new mixed-reality headset potentially in the works.
Supposedly, the headset has already been demoed to the company's board. For now, there is no set release date. Though some reports suggest the headset could be months away from a reveal, I wouldn't speculate on the exact timing of the mixed-reality keynote. If you are an investor with a three-year horizon (at minimum), you will probably capture the potential upside from the product reveal.
I think the stock is undervalued while trading below 29 times trailing earnings. Yes, history suggests a multiple near 30 times earnings is high, but there are reasons to pay the higher price, in my opinion. The company's services push is impressive, as too is the international growth opportunity at hand.
India could be a big Deal for Apple over the long run
As you may have heard, Apple opened its first store in Mumbai earlier this month. As expected, the opening drew major crowds. CEO Tim Cook was not just in India for the big day, though. He also met with Prime Minister Narendra Modi.
As the company looks to reduce its heavy reliance on China, I do think Apple could unlock a new pathway for growth in India. The Indian economy is growing very fast, with the population recently overtaking China for the title of the world's most populous country.
As India's economy looks to grow, we could see a rise in demand for higher-end smartphones. Apple's India expansion plans will not pay off overnight. However, I do think the move will boost growth and enhance the company's geographic diversification. More diversification is always a good thing!
The bottom line
Apple's stock has had quite the run off its lows. Still, it stands out to me as Berkshire's most intriguing investment. Given the Indian expansion potential and a new device that may be just a few quarters away, I do think a price-earnings ratio of 30 is not as hefty as it seems.
