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Warren Buffett's 10 Favorite Stocks

NEW YORK (TheStreet) -- What do Warren Buffett, Bill Gates, Mexican telecom pioneer Carlos Helu, Spanish retailer Amancio Ortega and Oracle (ORCL) CEO and co-founder Larry Ellison have in common? They are all featured in the top 5 of the most recent Forbes Worlds Billionaires list.

Buffett, the chairman and CEO of Berkshire Hathaway (BRK.A), has been one of the most successful investors in the history of Wall Street and his run of success continued in 2013. Berkshire Hathaway netted its shareholders over $16 billion in fiscal 2013, up 40% from last year. From the day he took over Berkshire in 1965 to 2006, the company's shares averaged a 21.4% compounded annual gain in per-share book value.

The octogenarian hasn't shown any signs of slowing down. Buffett's own personal fortune increased by $12.7 billion in 2013. As the brain behind Berkshire's billion dollar investments, the moves Buffett makes on the street send ripples throughout the stock market.

Buffett is confident in his investment strategies and with his proven track record, investors can be confident in them too. This is a list of Berkshire Hathaway's top 10 holdings as of the end of 2013.

1. Wells Fargo & Co (WFC)

Share Holding: 463,458,000
Holding Value: $21.04 billion
Company Stake: 8.8%
Weighting: 20.1%

The San Fransisco multinational bank is the fourth biggest bank in the country. Buffett increased Berkshire holdings 0.07% in fiscal 2013. Wells Fargo is by far the company's biggest holding with $21.04 billion invested in the company.

MUST Read: Warren Buffett's Annual Letter to Shareholders

TheStreet Ratings team rates WELLS FARGO & CO as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate WELLS FARGO & CO (WFC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, expanding profit margins, good cash flow from operations and notable return on equity. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 31.08% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, WFC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • WELLS FARGO & CO has improved earnings per share by 9.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WELLS FARGO & CO increased its bottom line by earning $3.89 versus $3.36 in the prior year. This year, the market expects an improvement in earnings ($4.05 versus $3.89).
  • The gross profit margin for WELLS FARGO & CO is currently very high, coming in at 93.57%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.85% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 72.70% to $14,423.00 million when compared to the same quarter last year. Despite an increase in cash flow of 72.70%, WELLS FARGO & CO is still growing at a significantly lower rate than the industry average of 167.25%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, WELLS FARGO & CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • You can view the full analysis from the report here: WFC Ratings Report
MUST Read: Warren Buffett's Annual Letter to Shareholders

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