2 Warren Buffett Stocks to Buy Hand Over Fist and 1 to Avoid

Key Points

• An estimated one-third of the U.S. adult population is at risk for kidney disease, making DaVita a tempting stock.

• BYD has the dominant share in the powerful Chinese EV market.

• Interest rates and sagging consumer confidence makes Lennar less appealing.

• 10 stocks we like better than DaVita ›

Warren Buffett is one of the most celebrated investors of our time. The famed chief executive officer of Berkshire Hathaway, who will celebrate his 95th birthday on Aug. 30, is finally retiring from the conglomerate after a 60-year career in which he made Berkshire one of the biggest publicly traded companies in the world. Buffett's buy-and-hold investing style will undoubtedly be studied for generations as he led Berkshire to legendary returns.

Berkshire's portfolio is closely watched for clues about where smart value investors can put their money, and Buffett has staked out large positions in dominant companies like Apple, American Express, Bank of America, Coca-Cola, and Chevron. Those five companies alone total 64% of the entire Berkshire portfolio.

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But looking beyond the obvious choices, I'm identifying two great Buffett stocks that I think are strong buys today, as well as one holding that I would avoid right now.

Image source: The Motley Fool.

Stock to buy: DaVita

DaVita (NYSE: DVA) is a healthcare company that focuses on kidney disease and chronic kidney failure. In addition to providing care, DaVita has a clinical research division that is focused on conducting clinical trials to create new drugs and medical devices to help patients manage their diseases.

The National Kidney Foundation estimates that 14% of U.S. adults, or about 35.5 million people, have kidney disease, with many of those cases undiagnosed. In all, an estimated one-third of adults in the U.S. are at risk. While those are grim statistics, it also speaks to the need for companies like DaVita, as well as the huge opportunity that the stock creates for long-term investors.

While DaVita stock makes up only 1.3% of Berkshire's overall portfolio, the conglomerate has a whopping 45% stake in the company. You can be sure that Buffett's team keeps a close eye on DaVita.

DaVita stock is down 10% so far this year, but the stock sells at a low price-to-earnings ratio of 13, suggesting that it is a solid value play.

Stock to buy: BYD Company

Chinese electric vehicle (EV) company BYD Company (OTC: BYDDY) is my favorite play right now in EV stocks. While there are many manufacturers battling for supremacy in the U.S., the domestic market isn't a great place for EV stocks right now – consider that Tesla is struggling thanks to Elon Musk's diminished popularity and the Trump administration's rollback of tax credits that made buying EVs more affordable.

Meanwhile, the EV market in China is booming. More than 11 million EVs were sold last year in China, while just 6 million were sold in the rest of the world. And BYD has the dominant market share in China, which has fully embraced EV technology. The Chinese government spent an estimated $231 billion to develop EV technology and nudged BYD from its previous focus on making smartphone batteries to making vehicles.

BYD sold 344,296 vehicles in July, up slightly from 342,383 on a year-over-year basis. But when you look at year-to-date numbers, BYD's sales of 2.49 million units are up 27.3% from a year ago.

BYD is facing some stiff competition from Xiaomi and Xpeng, both of which are seeing market share increase. But BYD has a powerful moat and the top position in China, which is why Buffett and Berkshire Hathaway favor it.

Stock to sell: Lennar Corporation

While I don't have anything against Lennar Corporation (NYSE: LEN) in particular, I'm not a fan of homebuying stocks right now. Mortgage interest rates remain high, and the housing market is struggling. And that shows in Lennar's recent performance. Revenue in the second quarter fell 7% to $7.8 billion. Lennar said it saw a 9% drop in average sale prices from a year ago, falling to $389,000. Gross margins also narrowed from 22.6% in Q2 2024 to 17.8% in Q2 2025.

Lennar is projecting sale prices to fall to between $380,000 and $385,000 in the third quarter, and Chief Executive Officer Stuart Miller says the company "continues to see softness in the housing market due to affordability challenges and a decline in consumer confidence."

There are far better stocks to choose from in the Berkshire portfolio. I'm staying away from Lennar for now.

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American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Patrick Sanders has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Chevron, Lennar, and Tesla. The Motley Fool recommends BYD Company and Xiaomi. The Motley Fool has a disclosure policy.