Warren Buffett Stocks with the Lowest P/E Ratios

Cheapness is a top characteristic Warren Buffett requires in companies he invests in, though they must also be high-quality companies. It makes sense then that his portfolio would contain quite a few low-P/E (price over earnings) companies. The lowest of the low are: General Motors Company (GM), ConocoPhillips (COP), Gannett Co. Inc. (GCI) and General Dynamics Corp. (GD).

A low P/E ratio indicates that while a company’s earnings have grown or remained flat, the price has not, for any number of reasons, and may later.

General Motors Company (GM)

Warren Buffett initiated a position of 10 million General Motors shares at an average price of $25 in the first quarter of 2012. The company has a P/E of 5.3, after a steady year-and-a-half P/E plunge.

GM, the world’s top-selling automaker, just returned to public trading on the NYSE in 2010, after filing for and emerging from Chapter 11 bankruptcy, with the help of the U.S. government. Then, GM posted the largest annual profit in its history for 2011, with earnings of $7.6 billion. But with the government retaining almost 30% ownership, GM’s stock price showed only a mild reaction to the news.

In June, GM reported May sales were the highest monthly in 33 months. Consumers purchased 245,256 vehicles in the U.S., up 11 percent year over year, and the highest level since August 2009. Buick and GM sales both were up 19%, and Chevrolet was up 10%.

GM also reinstated its missing dividend on June 12. The payment will be $0.59375 per share quarterly on its Series B mandatory convertible junior preferred stock.

ConocoPhillips (COP)

Buffett has 29,100,937 shares of COP as of the end of third quarter 2012, after whittling down the holding from its peak of over 83 million in 2008. Its P/E is 6, a three-year low. ConocoPhillips’ P/E was around the high teens in 2010, then dropped to the high single digits in 2011 and dropped further still to the current level in the second quarter of 2012.

Prior to that news, on April 4, the company announced it would split into two by spinning of its downstream businesses and remaining an upstream company. The distribution of one share of Phillips 66 for every two shares of ConocoPhillips stock took place on April 30, 2012.

On April 24, COP announced that its first-quarter earnings of $2.9 billion were slightly down from $3.0 the previous year, which coupled with the decline in stock price produced a low P/E.

Warren Buffett's Stocks with the Most Insider Buying

It is a widely known investing axiom that insiders sell their companies' stocks for any number of reasons, but they buy for only one reason - they think the stocks are going to go up. Because Warren Buffett 's stock-picking abilities helped make him one of the world's wealthiest men, checking into his portfolio for companies with heavy insider buying can be a good place to start research on worthwhile stocks.

The stocks in Buffett's portfolio with most active insider buying are: The Coca-Cola Company ( KO ), Gannett Co. Inc. ( GCI ), General Electric Company ( GE ) and The Washington Post Company ( WPO ).

Coca-Cola Company ( KO )

Warren Buffett owned 200 million shares of Coca-Cola at the end of the first quarter, making it almost 20% of his portfolio. He has never sold a share of the company.

Coke had three insider buys in the second quarter: Three directors bought shares. The largest purchase was of more than $20.3 million worth of shares by Director Barry Diller in April. As Diller's purchase price averaged about $77 per share, investors can buy the stock cheaper at its Tuesday price of $75.25 per share after a 0.67% increase for the day.

Six insiders also sold shares of the company in the second quarter.

Two days before Diller and another director bought shares, Coke announced that it was seeking approval for a 2-for-1 stock split. Coke's chairman was pushing for the split, the 11 th in its 92-year history and its first in the last 16 years. Shareholders will vote on the split July 10.

"Our recommended two-for-one stock split reflects the Board of Directors' continued confidence in the long-term growth and financial performance of our Company," said Muhtar Kent, chairman and CEO of TheCoca-Cola Company. "Our system's 2020 Vision to double our revenues over this decade provides a clear roadmap for creating value for our consumers, customers, bottling partners and shareowners. A stock split reflects our desire to share value with an ever-growing number of people and organizations around the world."

Coke also announced in the first quarter its 50 th consecutive annual dividend increase, giving shareholders an 8.5 percent raise from 47 to 51 cents per share per quarter.

Gannett Co. Inc. ( GCI )

Buffett owns 1,740,231 shares of Gannett Co. Inc. as of March 31, 2012, making it a mere 0.035% of his portfolio.

It tied with General Electric Co. ( GE ) for the second-most insider buys in his portfolio, with one director making two purchases of 20,000 shares in the second quarter. Gannett trades for $14.04 Tuesday after a 6.3% jump. Multiple newspaper companies' stocks advanced on Tuesday after News Corp. announced the potential spin-off of its publishing entities.

In its first quarter results released April 16, Gannett announced earnings per share of $0.28 compared to $0.37 per share in the prior-year quarter. Net operating revenues were down 2.6% over the prior year in publishing advertising and publishing circulation, but increased in its digital and broadcasting segments.

Gannett's focus on establishing digital content and advertising platforms that will generate growth was evidenced in a 13 percent increase of digital revenue growth in its Publishing segment.

Regarding future plans, the company is expecting 2% to 4% annual revenue growth and greater earnings growth by 2015, and plans to return more than $1.3 billion to shareholders by 2015.

"In addition, our new all-access subscription model has been rolled out in 38 markets and is progressing as anticipated," Gannett's president and CEO Gracia Martore said at a presentation to media and entertainment analysts in New York on Thursday. "New ventures like Digital Marketing Services and the USA TODAY Sports Media Group that leverage and extend our brands and assets are gaining traction and delivering results. We are confident in our strategy and our ability to achieve sustainable revenue growth while maintaining a strong balance sheet and generating increasing shareholder value."

The company also increased its revenue 150 percent to $0.80 per share annually and purchased approximately 2.4 million shares for $35.5 million during the quarter.

3 Key Measures To Improve Your Portfolio With Every Purchase

Everytime I make a new investment I am looking to improve my overall portfolio. There are 3 key measures that I look at in which a dividend growth stock purchase may improve my investment portfolio. A new buy may improve my portfolio by increasing overall diversification, increasing my current dividend yield or by increasing my dividend growth rate. Every single time I make an investment I look to improve the portfolio by at least one of these metrics. If a purchase helps me in more then one metric then it is even better. 

Increase Portfolio Diversification

Diversification involves reducing risk by investing in a variety of assets. For your overall financial picture this will involve investing in different assets such as stocks, bonds and real estate. For dividend growth stock investing, diversification involves investing in companies from different industries. You may want to invest in companies from the oil industry, retail industry or restaurant industry. There are many industries available to invest in which will aide us in our attempt to diversify our dividend growth stock portfolio.

When I look to make an investment I always look to see what industry the company operates in. Then I look over my portfolio to determine if I already have investments in that particular industry. If I do, how much of my portfolio does that industry make up. I don’t want to have all my stock investments be from one or two particular industries. For me the more industries I can invest in the more diverse my portfolio is. With higher diversification my portfolio will have less risk. This is because not all industries will be affected the same way by different market conditions. If the oil industry is really suffering, my oil stocks may be going down. However, my stocks from other industries may still be doing alright or even wonderful.

Increase Portfolio Dividend Yield

Another way I may look to improve my portfolio is by investing in stocks that will help increase my portfolio dividend yield. One of the goals of dividend growth stock investing involves bringing in dividend income. If I can increase my overall portfolio dividend yield then I am increasing the income that I am being paid by my companies.

For example, if I have a portfolio of dividend growth stocks that is worth $10,000 and I expect to receive about $350 in dividend income this year then my portfolio dividend yield is 3.5% (350 divided by 10,000). Now when I am looking at new investments I know that if I invest in any stock currently yielding higher then 3.5% it will raise my overall portfolio yield. If I decide to invest in a company that is currently yielding 5% then I will increase my portfolio yield. Let’s say I invest $1,000 in a company yielding 5%. I will expect this company to pay me $50 in dividend income this year. My new portfolio dividend yield will increase to 3.64% (400 income dividend by 11,000 portfolio). This is good because on the whole my portfolio is earning me more income for each dollar invested.

Buffett's Berkshire buys Waco newspaper

WACO, Texas - Billionaire Warren Buffett's company Berkshire Hathaway Inc. is expanding its newsprint division, buying the Waco Tribune-Herald, its second newspaper in Texas, the company announced Friday.

For Buffett, who is Berkshire's CEO, acquiring the Waco Tribune-Herald fits his stated interest in buying small and medium-sized newspapers in places with a strong sense of community.

"This is a very strong, growing market with terrific assets including Baylor University and the new research park," Terry Kroeger, president of Berkshire's BH Media Group and CEO of the Omaha World-Herald Company, said in a statement.

The Tribune-Herald is being sold by Robinson Media LLC, a Waco family business that bought it in 2009 from Atlanta-based Cox Enterprises. The newspaper has 124 employees.

The purchase, for an undisclosed price, is expected to close July 31.

The Tribune-Herald, with its daily circulation of 34,000 and 39,000 on Sundays, is one of many newspapers in which Buffett now has a stake. Buffett has said his company is likely to buy more newspapers in the next few years, and Berkshire Hathaway will not try to influence the editorial policies of any of them.

Berkshire Hathaway has owned the Buffalo News of New York for decades and bought its hometown paper, the Omaha World-Herald, in December. The company is also the largest shareholder of Washington Post Co., with a 23 percent stake.

Earlier this month, Omaha-based Berkshire announced that it is buying the Bryan-College Station Eagle, another Texas newspaper.

Berkshire also disclosed this month that it owned 3.2 percent of newspaper publisher Lee Enterprises' stock at the end of March.

In May, Berkshire announced a deal to buy 63 newspapers from Media General Inc. for $142 million. Berkshire also is lending $445 million to Media General. In return, Berkshire is getting a 19.9 percent stake in Media General and a seat on its board of directors.

Buffett has defended the viability of newspapers, saying that they will have a decent future if they continue delivering information that can't be found elsewhere. They also need to stop offering news free online, he has said.

"In towns and cities where there is a strong sense of community, there is no more important institution than the local paper," Buffett said in a statement last month.

Berkshire's Kroeger met with Tribune-Herald employees on Friday, saying there are no plans to make major changes at the newspaper or launch layoffs. He said the company will work with managers in Waco to determine what might need to be done.

"The long-term fate of the Waco Trib is in better hands with professional newspaper people than it is left in the hands of the local community," Robinson Media Chairman Clifton Robinson told the Tribune Herald.

Beyond newspapers, Berkshire owns clothing, insurance, furniture, utility, jewelry and corporate jet companies. It also has big investments in companies including Coca-Cola Co., IBM Corp. and Wells Fargo & Co.

From cnbc.com

How He Got Rich - The Forgotten Billionaire J. Paul Getty?

He's one of America's greatest success stories. But despite being the world's richest man during his time, J. Paul Getty is almost forgotten today.

The wealth Getty amassed is almost unimaginable. At one time, his estimated worth was roughly 1/900th of the entire U.S. economy. Today that would equate to $160 billion -- four times Warren Buffett's net worth.

Getty got his start in the windswept oil fields of Oklahoma. In 1914, at the age of 21, he became a wildcatter, searching for oil in some of the most unforgiving land in the country.

By the time he was 23, Getty had earned his first million (although $1 million in 1916 would be worth about $20 million today).

But J. Paul Getty was not just an oilman. And while he did make a fortune drilling for oil, he also made a fortune in a completely different place -- Wall Street.

Consider the story of Tide Water Associated Oil Co. Getty first bought the shares in 1932, in the middle of The Great Depression. The Dow had dropped from a high of 380 in 1929... all the way down to 40 -- a fall of nearly 90% in three years. Investors had dumped everything. No one was buying stocks.

Getty first bought shares of Tide Water at just $2.12 per share. Five years later, they traded above $20. And this is just one example of his success. Some stocks he owned grew to 100 times the value he originally bought them for.