The key to growing rich like Warren Buffett is patience and slowly building wealth. The famed billionaire value investor has built a solid foundation through his core portfolio that has protected his wealth and helped it grow significantly over the decades. Buffett’s core portfolio makes up around 73.5% of Berkshire Hathaway’s holdings, comprising Apple, Bank of America, American Express, Coca-Cola, and Chevron.
Besides his core portfolio, Buffett always sets aside some money for non-core investments to achieve excellent portfolio diversification. Today, we will look closely at Buffett’s more underrated holdings that make a small part of Berkshire’s portfolio but look too attractive to ignore.
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Amazon.com
Amazon.com (NYSE:AMZN) is in no way a minnow stock, but it is an underrated Warren Buffett stock because it is only a tiny part of his portfolio. Everyone knows of Amazon as the unequivocal king in the e-commerce space. However, it’s more than a site where people buy goods. Amazon also has a thriving advertising business, offers cloud computing products, and an expanding third-party seller service.
Amazon Web Services (AWS), its cloud computing segment, is set to lead the charge in the growing cloud computing trend. With the cloud computing market slated to hit the US$1 trillion mark by 2028, Amazon will benefit greatly with its cemented number one spot in the space. As of this writing, Amazon stock trades for US$153.73 per share, reflecting a discount of almost 20% from its 2021 all-time highs.
Visa
Visa (NYSE: V) is a long-standing and integral part of the global commerce infrastructure. Without Visa, a substantial part of worldwide monetary flow would be decimated. While many competitors have come along over the decades, Visa remains the largest in this space, with an incredible business model.
Visa only takes a small part of the money that it transports through its channels, much like a toll booth. However, that tiny amount it keeps is substantial due to the immense volume of monetary flow it oversees worldwide.
It is one of the rare companies that has managed to grow above 10% per year while paying its investors their shareholder dividends consistently. As of this writing, Visa stock trades for US$264.56 per share and is hovering at its all-time highs.
Suncor Energy
Suncor Energy (TSX: SU) used to be one of the rare Canadian investments held by Warren Buffett. It was a holding he offloaded in 2021, with the cyclical nature of the energy industry doing no favours to the integrated energy company headquartered in Calgary. However, Berkshire Hathaway’s 13F from the September 2023-ending quarter suggests the possibility of it finding its way back into his portfolio.
After offloading several big names that had been a part of his portfolio, the additions announced in the 13F might not be painting a full picture of what the Oracle of Omaha and his lieutenants have been up to. That said, there are reasonable grounds for speculation that Buffett might be re-establishing a position in Suncor stock.
While dozens of businesses can make the cut, Buffett has always had a strong inclination toward energy stocks. Considering that Suncor has an integrated structure, trades at a fair valuation, an excellent business model, and the fact that it was part of Berkshire’s holdings not too long ago, analyst speculations could be right.
As of this writing, Suncor stock trades for $43.39 per share and boasts a 5.02% dividend yield. Even if it’s not revealed to be a part of his portfolio again, Suncor Energy can be a good holding to consider.
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Foolish takeaway
Warren Buffett accumulated shares of the core holdings in Berkshire’s portfolio by investing whenever the stocks fell. The companies comprising his core portfolio are all market leaders in their respective industries. All his core holdings are solid companies. If you look at his underrated picks, even they are blue-chip stocks.
This proves his commitment to making strong bets likely to pay off over the long run instead of unnecessary risks with volatile, high-growth stocks. If you are considering investing for the long haul to emulate his approach, Amazon.com stock, Visa stock, and Suncor Energy stock can be good holdings for your self-directed portfolio.
