Warren Buffett hasn’t endorsed a candidate in the 2024 presidential race. However, the 94-year-old billionaire has revealed in the past that he is a Democrat.
With over 40 holdings in Buffett’s Berkshire Hathaway portfolio, he would likely have at least a few winners regardless of which party wins the most in next week’s elections. However, I predict that two Buffett stocks will especially soar if Vice President Kamala Harris beats former President Donald Trump and Democrats security majorities in the Senate and House of Representatives.
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It’s not hard to find stocks in Berkshire Hathaway’s portfolio that could potentially perform well with a Harris administration and a Democratic-controlled Congress. But I think the hands-down best Buffett stocks for a Democratic sweep are Lennar (NYSE: LEN) and NVR (NYSE: NVR).
Lennar is one of the top homebuilders in the U.S. Its market cap currently tops $45 billion. While the company is based in Miami, Florida, Lennar builds houses in 22 states. It also provides mortgage loans, title insurance, and closing services to homebuyers.
NVR shares much in common with Lennar. Although it’s smaller than Lennar (with a market cap of around $28 billion), the company is also one of the leading homebuilders in the country. NVR is headquartered in Reston, Virginia, and operates in 16 states. Like Lennar, it offers mortgage and settlement services to its customers.
Buffett wouldn’t be a huge winner if Lennar and NVR stocks take off after the elections, though. Berkshire’s stake in Lennar is only around $24 million, while its position in NVR is worth roughly $100 million. Neither holding amounts to even 0.1% of the conglomerate’s portfolio.
However, I predict Lennar and NVR will be the Buffett stocks most likely to soar if Harris and Democrats sweep in the upcoming elections for one simple reason. The vice president’s “to-do list” if she’s elected includes working to build 3 million new homes to boost housing supply and lower costs.
Harris wants to expand the Low-Income Housing Tax Credit. She wants to cut red tape associated with building new homes by streamlining processes for obtaining permits. The vice president intends to make more federal land available for housing development. Most importantly for Lennar and NVR, though, Harris seeks to give tax incentives to homebuilders who build starter homes for first-time homebuyers.
Tax incentives targeted to homebuilders should be music to the ears of Lennar and NVR shareholders. As two of the largest homebuilders in the U.S., you can bet both companies would scramble to take advantage of these incentives.
Lennar and NVR could also benefit from Harris’ other proposals. For example, many economists (including 23 Nobel Prize winners) believe her policies would lead to lower inflation than former President Trump’s policies, especially with his proposed steep tariffs. Lower inflation translates to lower interest rates, which make it more affordable for Americans to build new homes.
Everything discussed so far assumes that Harris becomes president and Democrats win the Senate and House. But what if there isn’t a Democratic sweep? Lennar and NVR stocks probably wouldn’t deliver nearly as impressive gains as they would with a full sweep.
However, both stocks should be solid long-term picks regardless of which party is in power. The U.S. continues to face a chronic housing shortage. With more homes needed, Lennar and NVR should see strong demand for years to come.
Which of these two Buffett stocks is the better pick? Probably Lennar. For one thing, its share price is much more affordable for most investors than NVR’s lofty share price of over $9,100. Lennar’s valuation is also more attractive with its shares trading at 10.7 times forward earnings compared to NVR’s forward price-to-earnings ratio of 17.6.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lennar and NVR. The Motley Fool has a disclosure policy.
Prediction: These 2 Warren Buffett Stocks Will Soar If Kamala Harris and Democrats Sweep in November was originally published by The Motley Fool