Berkshire Hathaway: An Underrated Gem Among Trillion-Dollar Companies

Currently, there are 10 companies globally boasting a market cap exceeding $1 trillion. At first glance, it seems unlikely that any of these giants would offer bargain stock options. These businesses are prominent, and their high valuations signal that the market largely favors them.

However, nestled within this elite list is one notable exception: Berkshire Hathaway. Having recently fallen below a $1 trillion valuation, this company presents a compelling opportunity for investors seeking both growth and stability amid market fluctuations.

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Understanding the Unique Appeal of Berkshire Hathaway

With a market cap around $990 billion, many investors are already familiar with Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). However, it stands out from other trillion-dollar firms for several reasons.

While most other companies of this size concentrate on specific sectors—like Apple in technology, Saudi Arabian Oil in fossil fuels, and Tesla in electric vehicles—Berkshire’s strength lies in its diversified business model. This adaptability allows it to thrive across various industries.

At the heart of Berkshire’s success is its extensive portfolio of insurance companies. These firms not only create underwriting profits but also produce what CEO Warren Buffett refers to as “float.” This float represents interest-free capital, allowing Berkshire to invest premiums collected from policyholders long before claims are paid out. This timeframe can extend for months or even years.

Buffett skillfully channels this float into investments across numerous sectors, including technology, energy, transportation, and consumer goods. As a result, although the core insurance operations contribute to its value, most of Berkshire’s worth today derives from its vast array of owned and publicly traded securities, some of which span obscure industries like drywall manufacturing and Latin American banking.

Clearly, Berkshire distinguishes itself from its trillion-dollar counterparts. This unique quality contributes to its status as a potentially undervalued asset in the current market landscape.

What Makes Berkshire Hathaway Stock Attractive Right Now

Forecasting stock market trends is notoriously difficult. While technology firms, particularly those involved in artificial intelligence and cloud computing, currently dominate the market, there’s no certainty that these companies will outperform others in the coming years. Market cycles remind us that stocks can experience significant downturns.

Investing in Berkshire Hathaway allows you to sidestep some of that sector-specific risk because of the company’s broad diversification across industries and regions. Purchasing Berkshire stock is akin to acquiring a diversified index fund, but with the added benefit of Warren Buffett’s experienced investment strategy.

Despite Berkshire’s robust reputation, traditional valuation metrics suggest it doesn’t appear cheap at this time. For instance, its price-to-book ratio is at multi-year highs. However, patience is key; historically, there has never been a bad moment to invest in Berkshire. For instance, if you had invested at the start of 2000, during the dot-com bubble’s peak, your total return would have doubled that of the S&P 500.

^SPXTR data by YCharts.

Berkshire Hathaway remains a compelling option compared to other trillion-dollar companies—not because it’s poised for rapid growth, but due to its long-term reliability. As Buffett often reminds investors, the company is designed for sustained success. With patience, investing in Berkshire is one of the most dependable choices you can make.

Seize This Opportunity Before It’s Gone

Do you ever feel like you missed the opportunity to invest in top-performing stocks? If so, it may be time to take notice.

Occasionally, our expert analysts provide a “Double Down” stock recommendation for companies they believe are positioned to grow. If you think you’ve missed your chance to invest, now might be the ideal moment to act before it’s too late. The results speak for themselves:

• Nvidia: If you had invested $1,000 when we made our recommendation in 2009, you would now have $346,349!
• Apple: If you had invested $1,000 with our analyst guidance in 2008, it would have grown to $43,229!
• Netflix: An investment of $1,000 at our recommendation in 2004 would now be worth $454,283!

Currently, we are issuing “Double Down” alerts for three remarkable companies, and this may be a rare chance.

See 3 “Double Down” stocks »

*Stock Advisor returns as of January 13, 2025

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, and Tesla. The Motley Fool has a disclosure policy.

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