3 Buffett-Owned Stocks You Should Buy Today

Everybody knows that Warren Buffett is uncannily astute when it comes to picking stocks. When looking for the right investments, it's hard to find a better money-making compass than Berkshire Hathaway.

Buffett's winning formula has made him a billionaire: pick underpriced stocks that offer attractive upside opportunities at current levels. Here's a detailed look at three such opportunities that offer immense potential.

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Allstate Corp. (ALL - Get Report)

Based on trailing earnings, Allstate Corp., a property-liability and life insurance organization, is trading at 11.15 times -- a discounted position when compared to the industry (12.5 times) and to its nearest rival, Progressive Corp. (14.5 times).

On a forward earnings basis, Allstate is cheaper than its direct competitors. The company is expected to grow its earnings-per-share (EPS) by 10.80% next year, a rate that's far better than the anemic 1% growth for Progressive and the 8.70% for the S&P 500.

Allstate also offers a decent forward annual yield at 2.06%. Its dividend yield is in line (or in range) with the 2%-to-3% offered by Progressive, American International Group and ING Groep N.V.

Further, Allstate has demonstrated a healthy and stable earnings platform: its five-year EPS growth is at 32%. This is among the best rates available in the market today, in comparison to like-sized peers such as ACE Ltd. (2.2%),Travelers Companies Inc. (11.07%) and Chubb Corp. (6.9%).

The company has embarked on a number of innovative measures geared to bolster its market reputation, including restrictive underwriting standards that could reduce loss ratios for new businesses, wealth returns to shareholders (across 2015, common shareholders have received $2.6 billion in cash), reinforced business climate with an extended homeowners' insurance division, and an improved auto insurance returns framework.

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Nordstrom Inc. (JWN - Get Report)

Nordstrom Inc. is a specialty fashion retailer, with nearly 300 stores in the U.S. located across 38 states. It also boasts of a robust e-commerce business through two dedicated portals.

The company's stock is currently trading at 16 times forward earnings. That said, Nordstorm is poised to rapidly enhance its earnings and expand its market penetration, as one of the earliest movers in the dynamic e-commerce space.

At its second-quarter earnings announcement, Nordstorm CFO Mike Koppel discussed the company's plans for the future, notably the possibility of receiving approximately $1.8 billion in net proceeds at closing, through the sale of credit card receivables to the Toronto-Dominion Bank.

About $900 million has been re-distributed among JNW's shareholders, at a special dividend price of $4.85 per share paid on October 27. Nordstorm also intends to add $1 billion to its share buyback program (with the authorization set to expire on March 1, 2017).

Nordstorm's package of initiatives reaffirms the company's commitment towards consistent shareholder value creation.

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Merck & Co. Inc. (MRK - Get Report)

Drug major Merck & Co. Inc. is an ideal value stock that meets Buffett's time-tested value investing criteria.
At less than 15 times one-year forward earnings, the company is cheaper than GlaxoSmithKline plc (nearly 17 times). Despite a few tumbles en-route (the short term price drop and the second-quarter earnings disappointment), Merck is a solid "Buy" at current levels.

Positive drug development progress, recent good margins (27%-30%), signs that indicate an improvement in sales and EPS growth next year -- Merck promises a plethora of positives. The company has slowly re-built itself after its five-year earnings decline, putting the past behind it and boldly striving forwards. Over the next five years, Merck EPS is expected to grow by 6.15% annually. The company's profitability is also substantially higher than industry and sector averages.

Finally, with debt placed at a manageable position and a forward dividend yield of over 3%, Merck offers tremendous growth possibility.

The greatest investor of all time gets sentimental about a specific investing strategy. How come? Because it helped him make his first million back in the day. Buy these fast-growing stocks and watch your portfolio beat the market year after year; just like the Oracle himself. Click here to learn more.

By Chiradeep BasuMallick 

Source: http://www.thestreet.com/story/13357613/1/3-buffett-owned-stocks-you-should-buy-today.html?kval=dontmiss