These are my best Warren Buffett shares to consider buying in 2024

Fans of Warren Buffett taking his photo

Many of us try to follow in the footsteps of our heroes. Warren Buffett, the boss of Berkshire Hathaway, is one of mine.

I haven’t come close to the average annual 20% he’s made for his shareholders since taking charge back in 1965. But can I do it in 2024? With so many UK shares at low valuations, it might be my best chance.

I intend to approach the year with two of Buffett’s key quotes in mind. And I already see some stocks that I think satisfy them.

Go for quality

Quote number one is this…

It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

1989 letter to shareholders

But, what if we see a wonderful company at a wonderful price? Isn’t that even better?

Right now, I’m thinking of our FTSE 100 banks. They still carry a fair bit of risk, as we really don’t know what harm they’re suffering from high inflation, bad debts, and all sorts of economic pressures.

But Warren Buffett doesn’t mind short-term risk, and he’s always been big on banks.

Cheap bank

NatWest Group (LSE: NWG) has a forecast dividend yield of over 7%. And that’s from a stock with a price-to-earnings (P/E) ratio of just five.

Forecasts show steady earnings, and a rising dividend too. It looks cheap to me.

NatWest has a specific risk, in the stake held by the UK government. That could depress the share price a bit when it’s sold. But that’s not the bank itself, and I’d just see it as a new buying opportunity.

FY results are due on 16 February. Until then, the firm’s Q3 update drew a picture of strong profits and very good liquidity.

The big question is whether NatWest is wonderful enough. As they’re so essential to our economy, I’d rate all the UK-focused FTSE 100 banks as wonderful.

Unloved gems

Casting round for other potential Buffett stocks, I see ITV. ITV produces high-demand content, but it’s been hit by weak advertising revenue.

If people have less money to buy your stuff, it makes less sense to spend more money trying to sell it to them. But advertising is an essential of any modern economy. And even if we should have another year of pain, I see long-term strength.

So, 8% dividend, P/E of 11 and dropping sharply due to forecast earnings growth. Some volatility, probably, but a company at the top of its game. That’s what I see, and I like it.

Sectors

My other thoughts are geared to a couple of key sectors. One is house builders, and how can there not be long-term demand there?

We all need something to keep the rain off, and there are barely enough roofs to go round. Stock valuations aren’t as cheap as they were. But I rate the FTSE 100 house builders as wonderful, and fairly priced.

The insurance sector is another Buffett favourite, and I’m eyeing up Legal & General, or maybe an Aviva top-up, as 2024 possibilties.

What second quote?

I almost forgot my second Buffett quote…

Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons.

2016 letter to shareholders

I rate diversification as essential, to keep risk as low as possible. But if we’re already well diversified, I see no reason not to buy big when we see specific stocks and sectors that look super cheap.

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Alan Oscroft has positions in Aviva Plc. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.