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

Looking for new investing ideas? A great place to start is sifting through the holdings of famous investors like Warren Buffett. Investment firms with more than $100 million in assets are required to publicly disclose their U.S. stock holdings each quarter, allowing anyone to see what they bought or sold.

With a portfolio in the hundreds of billions of dollars, Buffett has been disclosing Berkshire Hathaway's holdings for decades through 13-F filings with the Securities and Exchange Commission. Here are two top Buffett stocks to buy right now, and one to avoid.

Buffett's foray into big tech

Amazon (NASDAQ: AMZN) is one of the few technology stocks Buffett has purchased over the years, first buying shares in 2019. It is now one of the largest companies in the world by market capitalization, worth $2.36 trillion as of Oct. 23.

The company is a leader in two huge and growing sectors: e-commerce and cloud computing. Within online shopping, Amazon has a dominant position because of its vertically integrated fulfillment network, which delivers packages to shoppers much faster than any competitor for anyone who subscribes to Amazon Prime. In North America alone, Amazon did $100 billion in sales last quarter, along with $7.5 billion in operating income.

Cloud computing is smaller in terms of revenue, but it is a huge profit driver for Amazon. Last quarter, Amazon Web Services (AWS) generated $30.9 billion in revenue and $10.2 billion in operating income. That is a profit margin of 33%.

Put these profit engines together, and Amazon now trades at one of its cheapest valuation figures in it history. It has an enterprise value-to-EBIT (earnings before interest and taxes) of 30. As the business keeps growing and riding the dual tailwinds of e-commerce and cloud computing, Amazon should do well for shareholders who buy today and hold for many years.

Image source: Getty Images.

Hoping for a beer rebound

The second Buffett stock to buy is a more classic value investment, purchased less than a year ago: Constellation Brands (NYSE: STZ). This is an alcoholic beverage company with brands such as Modelo, Corona, and Pacifico under its umbrella, along with a plethora of niche wine and spirit labels.

Constellation Brands stock is down because of falling demand for alcohol, especially in the U.S. Last quarter, the company's beer shipments fell 8.7% year over year. It can make up some of these declines with price increases, but the business is clearly struggling at the moment.

With a forward price-to-earnings ratio (P/E) of just 12, investors are pricing in many years of decline for alcohol stocks such as Constellation Brands. Although it is clearly facing a demand headwind at the moment, it is unlikely that alcohol consumption will go away in the 21st century. Betting that this will end now feels like playing against the odds.

For this reason, it is likely that Berkshire Hathaway is making a contrarian bet when buying Constellation Brands stock. The company owns great alcohol brands that should perform well once the industry exits this temporary downturn.

AAPL Revenue (TTM) data by YCharts

Avoid what Buffett is selling

Counterintuitively, the one Buffett stock investors should avoid is actually his largest holding: Apple (NASDAQ: AAPL).

As of the last quarter, Apple was 22% of Berkshire's U.S. stock portfolio. However, it used to be a significantly higher percentage, with Buffett selling off much of the position throughout 2024 and 2025.

Why is Buffett selling this dominant consumer brand? It likely comes down to some simple valuation work. Apple stock has been a huge winner during the past decade for Buffett, and during this time, the stock's P/E ratio has begun to soar. It currently trades at a trailing P/E ratio of almost 40, with the forward P/E ratio at about 32. Apple is a low-growth business today, with revenue barely budging during the past five years. This is much slower growth compared to the other technology giants riding the wave in artificial intelligence (AI) and cloud computing.

Slowing growth and a high P/E ratio are the ingredients in a recipe for poor future stock price performance. Buffett is selling his Apple stock today because of this. Any investor should avoid buying Apple stock due to these factors.

Brett Schafer has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Apple, and Berkshire Hathaway. The Motley Fool recommends Constellation Brands. The Motley Fool has a disclosure policy.