Think It's Too Late to Buy Berkshire Hathaway? Here's the Biggest Reason There's Still Time.

I've said many times before that if I could only own one stock, it would be Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B). In short, investing in Berkshire is like buying a diversified investment portfolio selected by some of the best minds in the industry.

Recently, Berkshire became the first stock outside the technology sector to reach a $1 trillion valuation, and many investors think it might be too expensive to buy right now. But I'm not so sure.

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As of this writing, Berkshire has a $1.014 trillion market cap, and its stock portfolio has a value of about $301 billion. If we subtract that, and the $325 billion in cash Berkshire reported on its balance sheet at the end of the third quarter, we see the market is valuing Berkshire's businesses at about $388 billion. This is about 12.5 times trailing-12-month operating earnings, a lower valuation than most stocks on my radar.

The biggest reason to buy Berkshire

While the valuation is certainly a good reason why it isn't too late to buy Berkshire, the most compelling reason I'd still buy the stock right now is that $325 billion cash stockpile. And keep in mind that this was as of the end of September 2024. It has most likely increased even further by now.

This situation gives Berkshire tremendous financial flexibility. For the time being, Berkshire's cash is invested in short-term Treasuries and while interest rates vary over time, the cash is earning somewhere in the neighborhood of $12 billion annually for the company in interest income. But it could also be used if a recession or market crash hits to take advantage of opportunities, or to make a major acquisition if something attractive came along.

With so much economic uncertainty in the United States right now, Berkshire's financial flexibility could become a tremendous asset if the stock market becomes volatile.

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Matt Frankel has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.