Warren Buffett’s Berkshire Hathaway tops Morningstar Financial stock rankings

KBW Nasdaq Bank Stock Index Falls 17% This may be a good time to look at stocks in the financial sector over the past year.

At the end of 2022, the average Financial Services stocks covered by Morningstar were about 10% cheaper than fair value estimates. About 45% of the financial services stocks covered by the firm are undervalued, with undervalues ​​most common among credit services companies and banks.

it’s here Morningstar list Here are the top three undervalued stocks in the sector, in alphabetical order.

Berkshire Hathaway (BRK.B)- Get Free ReportWarren Buffett-led conglomerate: Morningstar analyst Gregory Warren assigns the company a wide moat (a permanent competitive advantage), giving the stock a fair value of $370. traded in dollars.

“Berkshire has Diversification And with a lower overall risk profile, it offers one of the better risk-adjusted return profiles in the financial services sector.

Warren said the firm “remains a generally solid candidate for downside protection during market downturns.”

“We are impressed with Berkshire’s ability to deliver high single- to double-digit growth in most years. book value Well above the estimated cost of capital per share. ”

“It will take some time before the company finally gives in to the obstacles created by the size and scale of its operations.”

black stone (BX)- Get Free ReportThe world’s largest alternative asset manager: Warren gave the company a narrow moat, giving the stock a fair value of $115. It is currently trading at $93.40.

“There was little in Narrow Moat Blackstone’s fourth-quarter results to change our long-term view of the company, but to adjust for weaker near-term flows than in the past. , which may slightly lower our fair value estimates,” he wrote in his commentary.

“We believe Blackstone is slightly undervalued compared to our revised fair value estimates.”

“We believe Blackstone is an outstanding alternative asset manager,” said Warren. “The company is private he has equity, real estate, credit and insurance, and Hedge fund solution. ”

city ​​group (Ha)- Get Free ReportMorningstar analyst Eric Compton gave the company no moat, estimating the fair value of the stock at $75. It is currently trading at $52.

“Citigroup is at a major turning point and remains in a complex situation,” he wrote in his commentary. “The bank is working on a consent order from the regulator, selling its international consumer business and refocusing on its asset sector.”

“This should make banks easier to understand and structurally more focused,” Compton said.

“However, Citi still lags structurally behind its peers in terms of profitability and struggles to beat its cost of capital. I don’t think we’re building a retail presence that can match our peers.”

However, “While Citi’s problems are real, we believe there is still room to improve valuations,” said Compton.