P/E Ratio: 23
Yield: 0%
Berkshire's insurance businesses have benefited from unusually benign weather - namely, the dearth of U.S. hurricanes. And Berkshire stock has already risen 22% since August. So why are we recommending Berkshire now? Simple. Warren Buffett knows how to exploit panics. He bought 5% of American Express in 1963, following a financial crisis that had cut AmEx's stock price in half. He started buying up shares of Geico in 1976 when claim-cost miscalculations left the auto insurer teetering near bankruptcy. And he picked the pocket of financially troubled energy company Dynegy in 2002, paying $928 million for a natural gas pipeline that Dynegy had bought for $1.5 billion only months earlier.
With $40 billion in cash idling on Berkshire's balance sheet at the end of the third quarter, Buffett looks ready to plunge in should a financial company, bond insurer, or homebuilder with attractive land assets need a white knight.
Last updated January 02 2008: 5:32 PM ET
