At $257,200.00 a share, investing in Berkshire Hathaway Inc. (NYSE: BRK.A) is simply not an option for most retail investors like us. But the nearly 50 other "Warren Buffett stocks" that Berkshire invests in come at a much lower price point.
While we at Money Morning don't recommend all of Warren Buffett's stock picks for retail investors, our experts do like a lot of them. One in particular is a stock Money Morning Director of Technology & Venture Capital Michael A. Robinson recently recommended.
But before we get to the stock pick, here's a list of the 10 top-performing Warren Buffett stocks so far this year...
| Company | YTD Gains |
| Moody's Corp. (NYSE: MCO) | 34.25% |
| Apple Inc. (Nasdaq: AAPL) | 30.24% |
| Verisign Inc. (Nasdaq: VRSN) | 29.88% |
| Restaurant Brands Inc. (NYSE: QSR) | 29.16% |
| WABCO Holdings Inc. (NYSE: WBC) | 28.97% |
| Visa Inc. (NYSE: V) | 26.20% |
| Liberty Sirius XM Group Class C (Nasdaq: LSXMK) | 24.54% |
| MasterCard Inc. (NYSE: MA) | 24.35% |
| Liberty Sirius XM Group Class A (Nasdaq: LSXMA) | 22.89% |
| Sirius XM Holdings Inc. (Nasdaq: SIRI) | 22.81% |
Again, we don't recommend all of the stocks above for retail investors. After all, Warren Buffett is one of the most wealthy and legendary investors in history. He has a completely different set of goals from us.
But there are several "Warren Buffett stocks" we do recommend for our readers. Of course, we've been recommending Apple stock to our readers as one of the best tech stocks on the market since February 2012. Our readers have made gains of 134.9% in that time.
However, Robinson recently recommended another stock on Buffett's list to readers on April 26, and it's No. 15 on the top-performing Warren Buffett stocks list.
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Warren Buffett owns nearly 4 million shares of this stock worth almost $188 million. And this company is still undervalued after gaining almost 19% (more than double the Dow) so far this year...
One of Our Favorite Warren Buffett Stocks
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Robinson recommended biotech company Sanofi SA (NYSE ADR: SNY) on April 26. Since then, the stock is up 3.6%, while the Dow is up 2.9%. Sanofi is up 18.8% so far this year, compared to only 9.4% for the Dow.
And these gains are expected to continue...
There are four reasons why Robinson likes Sanofi:
- Strong pipeline
- Partnerships with other companies
- International expansion into emerging markets
- Use of artificial intelligence (AI) in developing new drugs
The company has a huge pipeline of 44 drugs currently in development. Almost a third of those drugs, 13, are in phase 3 trials. Such a large pipeline helps reduce the company's risk of developing a drug that doesn't get FDA approval or doesn't sell well once on the market.
Sanofi's strong pipeline also includes a large number of treatments being developed in collaboration with other drug manufacturers. About half of the drugs in phase 3 trials are being developed in collaboration with other companies.
"In my view, it's a smart move to help split up the costs and risks of new drug development," said Robinson.
Sanofi is increasing its sales by going after emerging markets. Emerging markets allow the company to continue to profit from its off-patent drugs.
"For example, diabetes drug Lantus was a major revenue source for Sanofi, but it came off-patent in 2015. But diabetes is rising in Asia, and Sanofi can sell the drug without as much competition," said Robinson.
Lastly, Sanofi is on the frontier of using AI to speed up the drug development process.
Sanofi is teaming up with the privately held company Exscientia to scan drug studies to come up with a list of compounds that look promising to test in the lab (you can see Robinson's full explanation here).
By using this technology, companies can identify promising compounds for lab tests in one-fourth the time it currently takes, according to Exscientia. This could save Sanofi a lot of time and money developing new drugs.
Despite all of this, SNY is still undervalued when you compare its price/earnings (PE) ratio to its peers.
PE ratios indicate how much you are paying for a company's earnings. The ratio is calculated by taking the price per share divided by the earnings per share (EPS).
The biotech industry has an average PE ratio of 38.3. Sanofi's PE ratio is only 22.96, meaning you are paying 40% less for Sanofi's earnings than the earnings of the biotech industry as a whole.
And to make things even better, Sanofi pays an annual dividend of $1.64 (3.41%).
The Bottom Line: Warren Buffett is a legendary investor. Robinson couldn't agree more with Buffett's Sanofi pick. According to Robinson, there are four major catalysts that will drive the share price higher, along with a dividend yield of 3.41%.
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