4 Stocks Warren Buffett Loves for 2016

Warren Buffett doesn't swing at every pitch, but when he does he usually gets a hit.

The billionaire Berkshire Hathaway (BRK.A) (BRK.B - Get Report)  manager has built his fortune by buying when the time is right. And when he is shopping for opportunities, his value investing mantra drives him to seek out what he considers wonderful, quality companies -- hopefully at a bargain.

"Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down," he wrote in his2008 letter to shareholders.

And when Buffett buys a stock, he is likely to hold onto it for a while. He has said in the past that his favorite holding period is forever and advises others to play a long game as well. "If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes," he wrote in his 1996 investor letter.

Last quarter, Buffett appears to have found just four such investments that meet his buy criteria.

Here are four stocks Buffett acquired in the fourth quarter of the year, as per his latest 13F corresponding to holdings as of Dec. 31.

Kinder Morgan

 KMI data by YCharts

Kinder Morgan (KMI - Get Report) is Buffett's only new buy of the fourth quarter. The billionaire picked up 26.5 million shares of the energy company during the last months of 2015 worth about $395.9 million at year-end. The stock is one of his smaller holdings, comprising just 0.3% of his public equity portfolio.

Kinder Morgan operates as an energy infrastructure and energy company in North America. It has a $33.4 billion market cap and trades at a P/E of 33.24.

Of 14 analysts covering the stock, seven rate it as a strong buy, two a moderate buy and five a hold. TheStreet ratings gives it a D+.

TheStreet's Jim Cramer reacted to the news of Buffett's new stake on CNBC's "Mad Dash" segment, warning investors may want to think twice before following the Oracle of Omaha into the stock. He noted that the stock is back above the price it was at before going into a tailspin in the wake of its dividend cut. Despite the big selloff and potential large dividend payouts in the future, Cramer said he believes the stock is likely to struggle as long as oil and natural gas prices remain low.

Deere

 DE data by YCharts

Buffett upped the ante in Deere (DE - Get Report) last quarter, increasing his holdings in the stock by 34% to 22.9 million shares. Deere now comprises 1.3% of his public equity portfolio. The company is also one of Buffett's top dividend picks.

Deere has a somewhat unique story in Buffett's portfolio as an investment he hid from his public filings for a bit. In November 2014, SEC filings appeared to indicate he had dumped his stake in the company, closing out a position he had initiated in 2012. However, months later, it was revealed that he had simply omitted the holding from his public filing and instead had actually been buying the stock.

Deere, together with its subsidiaries, manufactures and distributes agriculture and turf, and construction and forestry equipment worldwide. It has a $24.8 billion market cap and trades at a P/E of 13.56.

Of 17 analysts covering the stock, two rate it a strong buy, 11 a hold and four a strong sell. TheStreet Ratings gives it a C+.

Liberty Global 

 LBTYA data by YCharts

Buffett added to his stake in Liberty Global (LBTYA - Get Report) by just under 5% last quarter. He now holds 12.5 million shares, giving the company a 0.4% allocation in his portfolio.

Liberty Global, together with its subsidiaries, provides video, broadband Internet, fixed-line telephony and mobile services in Europe, Chile, Puerto Rico, and internationally. Its market cap is $28.3 billion.

Of seven analysts covering the stock, six rate it a strong buy and one a moderate buy. TheStreet ratings gives it a D+.

Wells Fargo 

 WFC data by YCharts

Wells Fargo (WFC - Get Report) has been Buffett's top holding for quite some time (even though he hid it from his public filings for a second back in the '90s), and last quarter, he added to his stake even more. He upped his position by about 2% and now owns 479.7 million shares, giving the company a nearly 20% allocation in his public equity portfolio.

A provider of retail, commercial, and corporate banking services to individuals, businesses, and institutions, Wells Fargo has a $241.7 billion market cap and trades at a P/E of 11.4.

Of 21 analysts covering the stock, 11 give it a strong buy, four a moderate buy and six a hold. TheStreet Ratings gives it a B.

WFC is part of Jim Cramer's Action Alerts PLUS portfolio. Here is his latest take on the stock:

"Wells Fargo's strong fourth- quarter earnings results last month reflect strong returns, solid loan/deposit growth and quality assets. We expect Wells to outperform peers in an environment of economic uncertainty and volatility. Upside -- while relatively contained given the stable nature of its business -- should be driven by its attractive dividend (3.2%), proven track record of growth, profitability and risk management, and a diversified business model that offers pockets of growth. To top it all off, the company's sizable share buyback program should at the very least help provide a floor on shares, with the potential to drive upside to earnings estimates."

By Emily Stewart

Source:http://www.thestreet.com/story/13050974/1/stocks-warren-buffett-is-buying.html