When investing on Wall Street, patience pays off. Perhaps no investor has demonstrated how powerful an ally time can be than Berkshire Hathaway (BRK.A 0.47%) (BRK.B 0.80%) CEO Warren Buffett.
Since taking over as CEO in 1965, the Oracle of Omaha has led Berkshire to an average annual return of 20% on the nose, through 2020. This might not sound like much nominally, but when examined in aggregate through 2021's year-to-date gains, it works out to an increase in Berkshire's Class A shares (BRK.A) of almost 3,500,000%. In other words, when Buffett buys or sells a stock, Wall Street and retail investors have very good reason to pay attention, given his track record.
Berkshire Hathaway's portfolio is currently packed with nearly four dozen securities, many of which are profitable and time-tested. But in November, only a small handful stand out as screaming buys.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
If you have $500 at the ready, which won't be needed for bills or to cover emergencies as they arise, the following four no-brainer Buffett stocks can be bought hand over fist in November.
Bristol Myers Squibb
For income investors and value seekers, there's arguably not a more attractive buy in Warren Buffett's portfolio this month than pharmaceutical stock Bristol Myers Squibb (BMY 3.01%).
What makes Bristol Myers such an amazing company is its ability to leverage internal drug development with earnings-accretive acquisitions. For example, it worked with Pfizerto develop oral anticoagulant Eliquis, which has blossomed into a drug capable of $10 billion in annual sales for Bristol Myers.
Even more exciting is the long-term potential for cancer immunotherapy Opdivo. Even though some of the wind was knocked out of Opdivo's sails following late-stage disappointments in a variety of lung cancer studies, the drug still has 10 approved indications and is being examined in dozens of other clinical trials. After bringing in $7 billion in sales last year, label expansion opportunities could eventually push Opdivo to north of $10 billion in annual revenue.
Paired with this organic growth is Bristol Myers' monster buyout of cancer and immunology drugmaker Celgene in late 2019. While this deal brought a number of promising blockbusters into the fold, it's multiple myeloma drug Revlimid that's the prize. Revlimid has grown year-over-year sales by a double-digit percentage dating back more than a decade, and looks to be on pace to make a run at $13 billion in sales in 2021. Revlimid is protected from an onslaught of generic competitors until the end of January 2026, which provides Bristol Myers at least four more years of insane cash flow.
Opportunistic investors can snatch up this no-brainer value stock for under 8 times Wall Street's estimated forward-year earnings, and will be rewarded with a 3.3% dividend yield for their patience.
Image source: Getty Images.
Teva Pharmaceutical Industries
Now, if you're a value investor who doesn't care about dividend income all that much, brand-name and generic drug developer Teva Pharmaceutical Industries (TEVA -0.07%) has all the makings of a no-brainer buy in November.
Without sugarcoating it, Teva has had a miserable five-year run. We've seen a bribery settlement with the Justice Department, executive turnover, a complete shelving of its dividend, and a mountain of litigation concerning the company's role in the opioid crisis. All of these factors, coupled with its debt load following the Actavis acquisition, have cast a gray cloud over Teva. However, the sun is beginning to shine through in some places.
The key Teva's success rests with CEO Kare Schultz. Schultz is a turnaround specialist who, since taking over the helm at Teva in the latter part of 2017, has helped reduce annual operating expenses by the billions. He's also overseen a slashing in net debt from over $34 billion in late 2017 to closer to $22 billion, as of Sept. 30, 2021.
Further, Schultz is looking for ways to remove Teva's legal overhang. Last week, the company won a trial in California regarding its role in the opioid crisis; but Schultz is still hopeful for a favorable national settlement that'll put the matter in the rearview mirror. With the company focused on repaying debt, a settlement that provides reduced-cost or free medicine and has little or no cash penalty would be ideal.
Teva is also well-positioned to take advantage of an aging America and rapidly rising brand-name drug prices. As of the one of the world's largest generic-drug producers, its pricing power and volume should improve over time.
At less than 4 times Wall Street's estimated earnings per share in 2022, Teva looks like a steal.
Image source: Getty Images.
Visa and Mastercard
Don't worry growth stock investors, I haven't forgotten about you! The third and fourth no-brainer Buffett stocks to scoop up for the fourth quarter are payment processors Visa (V 0.38%) and Mastercard (MA 0.87%). I've chosen to combine them into the same section for simplicity given the similarities of their operating model.
The beauty of Visa and Mastercard is they allow patient investors to take advantage of the natural expansion of the U.S. and global economy. Although recessions are an inevitable part of the economic cycle, they usually only last a few months to a couple of quarters. By comparison, periods of expansion often last for years. In fact, the last economic expansion spanned 11 years in the United States. These long periods of economic growth spur consumers and businesses to spend, which lifts revenue and profits for this dynamic duo.
It's worth noting that Visa and Mastercard are the two most-dominant players in the U.S., the largest market for consumption in the world. Back in 2018, Visa held a 53% share of U.S. credit card network purchase volume, with Mastercard nabbing 22%. Between organic domestic growth opportunities and the ability to expand their infrastructure into emerging markets, there's a seemingly endless runway of potential for both companies.
And have I mentioned that Visa and Mastercard strictly stick to the processing side of the equation? While some of their peers do lend, and are able to reap the rewards of interest income and fees from lending, these lenders are also exposed to potential delinquencies when economic slowdowns arise. Since Visa and Mastercard don't lend, neither company has to set aside cash to cover loan losses. This is what helps both companies bounce back quicker than most financial stocks following a recession.
With both companies notably off their all-time highs, now is the time for investors to strike.
Sean Williams owns shares of Mastercard and Teva Pharmaceutical Industries. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares), Bristol Myers Squibb, Mastercard, and Visa. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.
