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Warren Buffett plans to step down as CEO of Berkshire Hathaway at the end of the year. As his 60-year tenure comes to an end, his cumulative stock picks have allowed Berkshire to approximately double the S&P 500's (SNPINDEX: ^GSPC) performance under his leadership.
Additionally, he has likely set up his company to drive returns long after his tenure has ended. Indeed, some of those stocks are likely better to hold than buy in today's trading environment. Nonetheless, some of Berkshire's holdings are still poised for growth, and investors can likely drive returns by buying these three Buffett stocks, even with a relatively modest investing budget like $3,000.
Image source: The Motley Fool.
1. Amazon
Amazon (NASDAQ: AMZN) is not a typical Buffett stock. Buffett likes to pay a "fair price" for "wonderful" companies. However, his team bought into this stock relatively late and likely paid a premium, given the timing of the purchase.
Buffett's company bought nearly 11 million shares between 2019 and 2022, and though it sold modest amounts of the stock in later years, it continues to hold 10 million shares. This is also less than 0.1% of the outstanding shares, meaning Berkshire has little influence over Amazon.
Nonetheless, the strong performance of Amazon's e-commerce-related businesses and its cloud enterprise Amazon Web Services (AWS) likely drew Berkshire's team.
Moreover, the company's massive $2.2 trillion market cap has not stopped its rapid growth. Its revenue in the first quarter of 2025 was $156 billion, 9% higher than year-ago levels.
Despite higher expense growth, other investments helped Amazon earn $17 billion in net income in Q1, a 64% year-over-year increase.
Also, while the stock rose modestly over the last year, the rising profits have pushed its valuation close to multiyear lows. At a P/E ratio of 34, today's Amazon may be the definition of a wonderful company at a fair price.
2. Constellation Brands
Alcohol giant Constellation Brands (NYSE: STZ) was Berkshire's most notable purchase in the first quarter of 2025. Even as Buffett's team was a net seller of stock during Q1, Berkshire boosted its position in Constellation by 114%, taking its share count to just over 12 million.
Additionally, Constellation is arguably the kind of distressed business that can draw an investor like Buffett. Gen Z's lower alcohol consumption has raised alarms about the future of its industry.
Furthermore, tariffs have become a concern, since Constellation owns Casa Noble Tequila, Corona beer, and the current No. 1 beer in the U.S., Modelo. Under such pressures, new tariff policies could cause Modelo to lose its No. 1 status.
Still, despite these concerns, consumers are unlikely to stop drinking alcohol, and thus, Constellation continues to hold its own. In the fourth quarter of fiscal 2025 (ended Feb. 28), revenue of $2.3 billion was unchanged from year-ago levels. Although it lost $375 million during that quarter, impaired assets of just over $1 billion weighed on its bottom line.
Those one-time charges boosted the P/E ratio just as its stock price fell with the bad news. However, the forward P/E ratio of 15 implies Constellation has become inexpensive and oversold, increasing the likelihood it will rise significantly as conditions improve.
3. T-Mobile
T-Mobile (NASDAQ: TMUS) has become the best-performing stock among U.S. telecommunication companies over the last five years. Unlike AT&T and Verizon, it was a wireless stock from its inception, leaving it without the legacy infrastructure costs of its competitors.
Buffett's team bought more than 5 million shares in 2020, and even with sales in recent quarters, Berkshire holds almost 3.9 million shares.
Buffett's team probably liked its success with competitive pricing. By offering lower prices than its peers, many customers switched from its competitors. In the first quarter of 2025, T-Mobile gained 1.3 million postpaid wireless net additions, the best in the industry.
Moreover, it has invested heavily in infrastructure. This involved the purchase of Sprint in 2020, which boosted its spectrum portfolio considerably. Spectrum is essentially radio frequency real estate, giving it the exclusive rights over prime frequencies in numerous markets. T-Mobile also invested heavily in capital expenditures to improve service quality in many of these markets.
With that, Q1 revenue of $17 billion rose 5% yearly. Also, since the company kept costs and expense growth in check, its quarterly net income of just under $3 billion surged 24% from year-ago levels.
Amid that performance, T-Mobile stock is up more than 45% over the last year. Although its P/E ratio of 24 exceeds its main peers, its strong growth should continue to translate into stock gains over time.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Healy has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Amazon and Berkshire Hathaway. The Motley Fool recommends Constellation Brands, T-Mobile US, and Verizon Communications. The Motley Fool has a disclosure policy.
