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In October, a vast number of publicly traded companies reported their latest sets of quarterly earnings. That surely kept Warren Buffett and his team at the fabled investor's Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) busy. This is because Berkshire has a bulging equity portfolio stuffed with some of the most familiar stocks in the investing world, and more than a few reported during the month.
After parsing the results posted by Bank of America(NYSE: BAC) and Procter & Gamble(NYSE: PG), I feel those two Berkshire stocks in particular are poised for gains. Read on to find out why.
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1. Bank of America
All in all, the U.S. banking sector had a decent earnings season this fall. Among the outperformers was the sprawling Bank of America. Despite posting only an uptick in total revenue compared to the same period of 2023 -- not to mention a slide in net income -- the big lender beat analyst estimates for both revenue and profitability.
Yet the twin beats didn't do much to boost the company's stock price, which has been lagging behind the bellwether S&P 500 index since mid-summer.
Interestingly, one of the reasons for this is the series of major sell-offs of Bank of America stock from the Berkshire portfolio. Buffett and his team began unloading the huge position in the lender in mid-July, and continued on a sporadic basis well into October. All told, Berkshire has unloaded more than $10 billion worth of the stock.
In my view, this is only a trimming of a stock position that was enormous and rather unbalanced. Regardless, Berkshire's continued sell-offs drained confidence in the bank. After all, given Buffett's reputation, many investors mimic his moves, assuming his sales indicate a loss of confidence in the company.
Investors shouldn't lose faith in Bank of America so easily. No, it's not the most dynamic of the four big national banks (that honor, in my opinion, should be bestowed on powerhouse JPMorgan Chase). Still, it's a solid lender that has a good fundamental base. Plus, despite its subdued third-quarter results, it is managing to grow in areas that are quite lucrative, namely investment banking and asset management.
I think the market is either ignoring Bank of America because it didn't have a blowout third quarter, or that Berkshire keeps selling it, or both. Whatever the reason or reasons, the lender's stock looks like a good buy these days.
2. Procter & Gamble
Elsewhere in the slow grower bargain stock club, we have consumer goods mainstay Procter & Gamble. Like Bank of America, Procter & Gamble is a familiar name in American business that isn't necessarily in fashion with investors at the moment.
The company, which holds an impressive portfolio of brands including Tide laundry detergent, Head & Shoulders shampoo, and Gillette shaving products, among many others, hasn't been performing up to the market's standards.
In mid-October, P&G released its results for the fiscal 2025 first quarter, ended Sept. 30. These revealed an uncharacteristic year-over-year decline in net sales. Uncomfortably, this was the second time in a row the top line had eroded, and it spooked investors.
It seems that in recent months, people have been opting for cheaper alternatives to those classic P&G brands. Much of this has to do with economic worries, chiefly about inflation.
Yet according to several recent yardsticks, inflation is almost back to normal while other key economic indicators -- like employment and gross domestic product -- continue to develop favorably. Despite the top-line dip in the first quarter (which was only 1%, after all), P&G is modeling a rebound. In its latest earnings release, it maintained its 2% to 4% growth projection for the full fiscal year and, better, 10% to 12% improvement in per-share net income.
Meanwhile, Procter & Gamble is among the most regal of the Dividend Kings -- that rare breed of company that has declared a dividend raise at least once annually for a minimum of 50 years in a row. In fact, its raise streak passed Social Security age not long ago, as it's now 68 years old. That payout boasts a dividend yield of 2.4%, quite some distance above the 1.3% average of S&P 500 index stocks.
With P&G, we have a company with an unmatched portfolio of mass consumer brands that are never going to go out of style -- years from now, we'll still be shaving with Gillette razors -- accompanied by an ultra-reliable, generous, and constantly growing dividend. P&G is a bargain just now.
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, Berkshire Hathaway, and JPMorgan Chase. The Motley Fool has a disclosure policy.
