Prediction: These two Warren Buffett stocks will skyrocket in 2025

Warren Buffett is rightly considered the greatest investor of all time.

His company, Berkshire Hathaway (BRK.A 1.32%) (BRK.B 1.16%)is now worth around $1 trillion, thanks to little more than Buffett’s investing skills. Berkshire is one of the most valuable companies in the world, not because of a blockbuster product or dominance of a particular industry, but because of Buffett’s ability to make market-beating investments – both in Berkshire’s stock portfolio and its wholly owned subsidiaries.

Not surprisingly, the 94-year-old’s investing activities are still closely followed by millions. Berkshire currently maintains a relatively slim portfolio of 39 stocks and exchange-traded funds (ETFs), so it’s worth paying attention to the stocks he owns.

In recent years, Berkshire has added a number of homebuilding and apartment-related stocks to its portfolio, and those moves appear to be paying off as the real estate market is expected to recover next year. The Federal Reserve is now cutting interest rates, which should help lower mortgage rates and spur a rebound in home buying. Existing home sales are now down 40% compared to pre-pandemic levels.

Read on to see two of Warren Buffett’s stocks that could continue the trend into next year.

1. NVR

NVR (NVR 0.51%) is often considered the best homebuilder stock in its class, and it’s easy to see why. The stock has risen an incredible 175,000% over the last 30 years, meaning $1,000 has become $1.75 million.

The home builder, whose brand names include Ryan Homes, NVHomes, Fox Ridge Homes and Heartland Homes, operates in 16 states and is focused on the eastern half of the U.S. and Washington, D.C., has thrived through a different business model than before.

Instead of buying land to build on, which is risky, NVR has an asset-light model based on land purchase agreements, which gives it the option to buy land and helps it preserve its liquidity.

All of this has helped the company better cope with the boom and bust cycles of the residential construction industry. With the nationwide housing shortage running into millions of homes, there are ample opportunities for growth for NVR, especially as the housing shortage and lack of affordable housing have become key issues in the election.

Recent growth has been modest due to housing headwinds, including high mortgage rates, but that should moderate now that the Fed is cutting rates. As home buying becomes more affordable, the increasing demand for new homes is likely to benefit an experienced operator like NVR.

With a price-to-earnings ratio (P/E) of 20, the stock is well valued to benefit from a new real estate boom.

2. Louisiana Pacific

Let’s stay in the housing sector but turn to construction materials, another promising Buffett stock to buy Louisiana Pacific (LPX 0.63%). It is the world’s largest manufacturer of oriented strand board (OSB), an engineered wood product similar to particle board.

The company is known for products such as siding, subfloors and sheathing. Like NVR, Louisiana-Pacific should also benefit from new home construction. It is also expected to benefit from home improvement projects and renovations, which are expected to rebound after a lull due to falling interest rates, and from Americans, who have record levels of home equity, which reached $35 trillion in the second quarter.

Falling home loan interest rates will make it easier for Americans to tap into that wealth, even if they don’t move.

Louisiana-Pacific is already seeing strong demand for its products. Siding sales increased 30% to $415 million in the second quarter and OSB sales increased 53% to $351 million.

The company also saw strong growth on the bottom line, reporting a net income of $160 million, compared to a loss of $21 million in the year-ago quarter. The forecast is for growth to continue, and tailwinds should increase as interest rates continue to decline.

The OSB supplier could see a surge in demand this time next year as the home improvement market gets back on its feet.