OArren Buffett, often referred to as the Oracle of Omaha, is an American businessman, investor, and philanthropist. He is the CEO of Berkshire Hathaway, a diversified holding company whose subsidiaries are active in insurance, rail freight, power generation and distribution, manufacturing and many others.

He is one of the most successful investors in the world, with a net worth of over $113 billion. He has had outstanding returns in the market, which makes it easy to see why investors are always looking to see his next move.

It’s always a good sign to see that Buffett has recently opened a position in any stock you own. When you see him grow in a position, it’s an even more incredible feeling.

Buffett has been on a shopping spree throughout 2022, becoming more aggressive on the buy side than we’ve seen in recent years.

He increased his position at both Apple AAPL and General Motors GM and even started a new role at HP HPQ. Let’s dig into the three companies a little deeper to understand why he took these steps. The chart below illustrates the year-to-date performance of the three companies while incorporating the S&P 500 as a benchmark.

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Apple

Apple AAPL has completely changed the mobile phone landscape over the past decade, and it’s one of the best places for investors to park their money. In the previous five years, stocks rose 320% and easily outperformed the S&P 500.

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Warren Buffett has repeatedly said he was drawn to Apple stocks because of the company’s brand loyalty. This essentially means that AAPL customers will likely stick with the company over the years, constantly switching from older iPhone models to newer ones. Moreover, he believes that Apple’s services and products are very beneficial to society.

Apple has released strong quarterly results on multiple occasions, beating EPS estimates in 19 of its last 20 quarterly reports. Over the previous four quarters, the company has acquired a double-digit average EPS surprise of 12%.

In its last quarter, in the face of unfavorable business conditions, Apple still managed to exceed net income estimates by 6.3%. Earnings are expected to increase 9% year-over-year in FY22, and in FY23, net income is expected to increase an additional 8.7%.

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Looking at valuation, Apple is currently showing a forward earnings multiple of 24.3X, well below 2020 highs of 41.5X and slightly above its five-year median of 19.9X. Additionally, the value represents a 35% premium to the S&P 500 forward P/E ratio of 18.1X.

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resume

HP HPQ is one of the world’s leading providers of personal computing, imaging and printing products. Over the past five years, stocks have risen 158% in value, easily outpacing the S&P 500.

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HPQ has consistently released strong quarterly results, stringing together 13 consecutive EPS beats dating back to 2019. Over its past four quarters, HPQ has gained an average EPS surprise of 8.4%, and in its latest quarter, the company has slightly exceeded net profit estimates by 2%.

The current FY22 EPS estimate of $4.31 reflects significant 14% year-over-year earnings growth from 2021. Additionally, earnings are expected to grow 2.5% additional in FY23.

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Based on valuation metrics, HPQ is showing an attractive forward earnings multiple of 9.1X, well below 2017 highs of 13.4X and just a tick below the 9.3X median over the past five last years. Additionally, the value represents a hefty 49% discount to the value of the S&P 500. In my opinion, this is one of the main reasons Buffett invested in the company – it sounds like a game of Buffett’s classic value.

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General Motors

General Motors GM is an American multinational automobile manufacturing company headquartered in the automotive city of Detroit, Michigan. Over the past five years, equity performance has been a little discouraging, rising around 25% in value and significantly underperforming the broader market.

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GM has delivered strong results, beating net income estimates for 15 consecutive quarters dating back to 2018. In its last four quarterly reports, the company sports a double-digit average EPS surprise of 25%, and in its latest quarter, GM easily beat earnings estimates by 34%.

For the current fiscal year, earnings are expected to decline by just 2.5%, and in fiscal year 23, earnings are expected to decline by another 1%.

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General Motors boasts a beautifully low front P/E ratio of 5.6X, an absolute fraction of 2020 highs of 22.9X, and well below the five-year median of 6.6X. Additionally, the value represents a whopping 69% discount to the value of the S&P 500.

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Conclusion

For market players looking to invest like the Oracle of Omaha, the three companies above provide precisely that. Buffett has amassed a fortune in the market, and it’s pretty easy to see why investors like to emulate his holdings.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.