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Investors often look to Warren Buffett's purchases when trying to pick the best stocks to buy.
And with good reason: Buffett's conglomerate, Berkshire Hathaway (NYSE: BRK.A, BRK.B),
has an impressive track record and got off to a stellar start this year. Berkshire Hathaway gained 8.7% in January, beating the Standard & Poor's 500 Index's 6% rise and the Dow Jones Industrial Average's 7% increase.
It's also a good sign when Buffett's picks include companies with heavy insider buying, given insiders buy because they expect shares to rise.
That's why MarketWatch and Insider Monkey just took a look at Buffett's 38 holdings and compared his purchases to stocks that have had sustainable insider buying in the past 90 days.
And who knows better than insiders? These folks are privy to the most current information on their companies' prospects, and research shows stock prices rise more after insiders' net purchases than after net sales.
MarketWatch and Insider Monkey came up with the following five stocks to buy now, based on Buffett's holdings and insider buying.
Five of the Best Stocks to Buy Now
- American Express Co. (NYSE: AXP): This credit card company that targets affluent members has been a Berkshire Hathaway staple for years. Buffett has amassed roughly 49 million shares of AXP, or a 10.1% stake, making it one of Berkshire's largest holdings. In November 2012, AXP Director Jan Leschley acquired a sizable chunk of additional shares. Since then, the stock has jumped more than 16%.
- DeVita HealthCare Partners Inc. (NYE: DVA): In 2011, Buffett began accumulating shares of this dialysis and kidney care provider, which strives to improve patients' quality of life through innovative clinical care and integrated treatment plans. Buffett has acquired 14 million shares and now holds an 11.1% stake in the company. Berkshire is technically an insider in that it is classified as a large shareholder by SEC standards. Among reasons Buffett likes the company: Earnings are expected to grow at a very healthy 13% – 14%.