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It’s great that we don’t have to guess which stocks Warren Buffett likes. We only have to look at Berkshire Hathaway‘s (NYSE: BRK.A) (NYSE: BRK.B) regulatory filings.

Buffett’s Berkshire Hathaway portfolio includes many solid stocks. But some of them are better — and worse — than others. Here are three Buffett stocks to buy in September — and one to absolutely avoid.

No-brainer No. 1: Bank of America

Bank of America (NYSE: BAC) ranks as the second-largest holding in Berkshire’s portfolio. While Buffett has lost his enthusiasm about several other bank stocks, he added more BofA shares in the first quarter of 2023.

The stock is down more than 20% below its 52-week high, primarily due to the fallout of the banking crisis that began earlier this year. However, Bank of America boasts a rock-solid balance sheet. Its business continues to fire on all cylinders, with earnings jumping 19% year over year in the second quarter.

Bank of America offers an attractive dividend yield of 3.3%. Its stock trades at around 8.6 times expected earnings, much lower than the financial sector average forward earnings multiple of 13.4x.

No-brainer No. 2: D.R. Horton

Buffett initiated a sizable new position for Berkshire in D.R. Horton (NYSE: DHI) in the second quarter. D.R. Horton has been the largest U.S. homebuilder for more than 20 years. It operates in 33 states and holds the No. 1 position in all five of the country’s biggest housing markets.

The Oracle of Omaha clearly believes the U.S. housing market is poised to grow. In addition to buying shares of D.R. Horton in Q2, he also started new positions in two other homebuilders. Considering that the U.S. continues to experience a significant housing shortage, Buffett’s bullish view of the housing market appears to be right on the money.

D.R. Horton looks like a great way to play the housing boom. Even though the stock is up over 30% year to date, shares still trade at only 9.4 times expected earnings.

No-brainer No. 3: Mitsubishi

Buffett has become a big fan of Japanese trading houses. He upped Berkshire’s stake in five of them in June 2023, including Mitsubishi (OTC: MSBHF).

There are plenty of reasons why Buffett likes Mitsubishi — and retail investors should, too. It’s the largest of the Japanese trading houses, with a market cap of close to $68 billion. Like Berkshire itself, Mitsubishi is a conglomerate that operates in and invests in a wide range of businesses. These businesses, including automotive products, chemicals, energy, and mineral resources, generate reliable cash flow.

Probably the most important factor for Buffett, though, is Mitsubishi’s valuation. The stock trades at roughly 10.5 times trailing-12-month earnings. It also pays a nice dividend yield of more than 3%.

One to avoid: Activision Blizzard

Activision Blizzard (NASDAQ: ATVI) has been a big winner for Buffett. However, he sold most of Berkshire’s stake in the video game maker in Q2. That was a smart move, in my view. His decision was no doubt based on Activision Blizzard’s risk-reward profile.

There’s simply not much potential for reward left if Microsoft‘s acquisition of the company finalizes. Activision Blizzard’s current share price is only around 3% below Microsoft’s offer of $95 per share.

The chances that the transaction closes appear to be pretty good now that Microsoft has submitted a restructured agreement that could satisfy U.K. regulators. However, there’s plenty of room for Activision Blizzard stock to sink if the Microsoft deal somehow falls through.

Buffett knows that a potential 3% gain isn’t enough to justify taking on the risk that the acquisition is blocked. This unfavorable risk-reward proposition makes Activision Blizzard one Buffett stock that investors should absolutely avoid right now.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Keith Speights has positions in Bank of America, Berkshire Hathaway, and Microsoft. The Motley Fool has positions in and recommends Activision Blizzard, Bank of America, Berkshire Hathaway, and Microsoft. The Motley Fool has a disclosure policy.

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