From Nasdaq:

Warren Buffett has some advice for investors in 2024: don’t buy any stock unless it passes a specific test. This test has two steps: 1) determine if you can estimate earnings for five years, and 2) only buy if its price is reasonable relative to the estimated earnings. Buffett’s alternative is investing in low-cost S&P 500 index funds.>

The most difficult part of Buffett’s test for buying stocks is estimating a company’s earnings for the next five or more years. Even Buffett has acknowledged that he and his business partner have had difficulty estimating future earnings. He has also made mistakes in buying stocks, despite attempting to stay within his “circle of competence.” Investors will be better equipped to estimate future earnings for stocks within their familiar industries.>

Two stocks that pass the Buffett test in 2024 are D.R. Horton and Meta Platforms. D.R. Horton trades at only 11.4 times expected earnings despite its shares soaring 70% last year. The Fed hinting that interest rates should come down should allow D.R. Horton to build and sell increasingly more homes for years to come. Meta Platforms based on analyst’s five-year earnings-growth projections, its price-to-earnings-to-growth (PEG) ratio is a low 0.79.>

Should you invest $1,000 in Meta Platforms? Before you buy stock in Meta Platforms, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Meta Platforms wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. This article was not originally created by Nasdaq.



Read more: Take Warren Buffett’s Advice: Don’t Buy Any Stock in 2024 Unless It Passes This Test