Buffett Bought These Stocks — Should You?

The wisdom of Warren Buffett as represented in his stock picking is music to
any investor's ears. His approach is so disciplined and so successful that it
stands to reason that if all everyone did was purchase the same stocks he does,
and held just as long, we'd all be rich. Of course, that's not exactly true,
as Buffett's holdings through his firm, Berkshire Hathaway (NYSE: BRK.B )
are not made public until many months after his purchase. However, that
doesn't mean there isn't value in the stocks he selects. After all, he says
his ideal holding period is forever. So if it means getting in a bit later than
he does, and holding as long as he does, it shouldn't matter that much in the
long run. But suppose you are just starting out in the market and want to fill
your portfolio with some of his selections. Does it make sense even at this late
date? It might. It depends on your own risk profile and investment horizon. Here
are three Buffett stocks worth examining. DirecTV (NASDAQ: DTV ) has been a
personal favorite of mine for some time. While other cable and satellite firms
have struggled, DirecTV has consistently increased market share and added
subscribers while increasing the average revenue it collects from each
subscriber and it has seen explosive growth in Latin America. DTV uses its
capital incredibly efficiently (return on invested capital is 23%), has been
buying back stock hand over fist and is a marketing juggernaut. I got a little
worried when second-quarter subscriber numbers disappointed , but the company
has bounced back with stellar Q3 earnings. The company added 1.28 million new
subscribers in the U.S. alone, and Latin America growth continued unabated. My
only question is what the company's long-term vision might be. There's still
plenty of territory to grab, but at some point one wonders what keeps
subscribers from cutting the cord when and if delivery systems become
commoditized or Internet delivery supercedes satellite. For now, I think Buffett
is right on target, but I have that lingering question in my mind. I love dollar
stores . I compare them often. All this time, I've always sided with Dollar
Tree (NASDAQ: DLTR ) over its competitors. My resolve was shaken when hedge fund
guru Bill Ackman took a big position in Family Dollar Stores (NYSE: FDO ) and
when Warren Buffett opened a position in Dollar General (NYSE: DG ). What are
these guys seeing that I don't? I don't know what Buffett is thinking.
Dollar General sits on $2.77 billion in debt (which is vastly more than its
competitors), has net margins well below Dollar Tree's and still trades at
roughly the same valuation as its competitors. I don't get this one at all,
and I say stay away. There is, however, little to argue with regarding Warren
Buffett's holdings in Coca-Cola (NYSE: KO ). This is one of those cases where
he's had this stock a very long time and has seen mega-returns. That doesn't
mean KOs run is over, though. It does, however, look mighty pricey at $66 not
much below where it was when I examined it as part of the "Should You Buy the
Dow series. Don't jump in right now. Wait for a pullback to at least the
mid-50s uh, stock price, that is, not the 1950s, when Buffett probably bought
in. As of this writing, Lawrence Meyers did not hold a position in any of the
aforementioned stocks.