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Berkshire Hathaway could still be a strong investment, even with Greg Abel taking over leadership from Warren Buffett.
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Allegion presents a promising long-term growth opportunity with its favorable valuation.
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After a difficult year in the past, American Electric Power’s stock has surged ahead of the S&P 500 in 2025, showing little sign of slowing.
Investors tend to focus on stocks for their reliability and reasonable valuations.
Berkshire Hathaway (NYSE: BRK.A, BRK.B), along with Allegion (NYSE: ALL) and American Electric Power (NASDAQ: AEP), are all performing better than the S&P 500 in what has been a volatile 2025. However, jumping into stocks simply because they are trending well right now might not be the best strategy.
These companies all fit into the category of value stocks, which could make them worthwhile investments at this time.
Berkshire Hathaway’s annual growth rate stands at 10.4% so far this year. Warren Buffett built the company into an entity with a market value exceeding $1 trillion. With Greg Abel stepping in as the new CEO at the end of 2025, there’s potential for the company’s market cap to double and for it to outpace the S&P 500.
Berkshire enjoys various advantages that could ensure its long-term success. Its portfolio includes several high-dividend stocks, such as Apple, American Express, Coca-Cola, Bank of America, and Chevron. Additionally, the company holds substantial cash reserves that can be put to good use for investments. The most significant asset, however, lies within Berkshire’s managed companies.
The company has shifted its strategy from focusing strictly on public equities to enhancing its managed businesses, like its insurance operations, Berkshire Hathaway Energy, BNSF Railroad, and various manufacturing and retail segments. Collectively, the value of these managed companies far exceeds their public equity investments. This transition allows Berkshire to generate operating profits that can be reinvested or parked in cash and Treasury bills. Since Berkshire typically doesn’t pay dividends and only buys stocks when they’re deemed undervalued, it maintains a healthy reserve for its best ventures.
Berkshire’s returns from its insurance float—essentially, the premiums collected that haven’t yet been paid out as claims—are noteworthy as well. This float has grown to $173 billion as of March 31. Investing that float in low-risk assets at, say, 4% still nets a significant annual return. Overall, this structure provides Berkshire with numerous avenues to create value and benefit patient investors.
Looking at Allegion, which saw its shares increase by 8.6% this year compared to the S&P’s slight dip, the company’s long-term growth narrative is compelling. Factors shaping Allegion’s future include the merging of electronic and mechanical security, the growing importance of safety, particularly in public sectors, and ongoing consolidation within its industry.
The rise of smart, web-connected technologies in security products is creating value for property owners, who can better manage access and gather critical usage data. This demand is only expected to grow amid rising urbanization and its associated challenges.
Management expects double-digit revenue growth rates. Analysts project Allegion could achieve around $675 million in free cash flow by 2026, with a revenue multiple of 16.7 times and earnings per share around $8.42.
As for American Electric Power, although the S&P 500 has faced ups and downs this year, its stock has steadily gained 1.3%. This stock still offers a reasonable valuation that attracts both value investors and those interested in dividend income, with a 3.7% yield.
The utility operates under more regulatory constraints but generally ensures a steady return. While that might not excite growth-focused investors, it suits those looking for safer options. Management aims to provide shareholders with returns within the 10% to 12% range annually by relying on modest revenue growth and solid dividends in the vicinity of 4%.
With uncertainties around trade policies and geopolitical factors influencing market stability, investors are gravitating toward reliable utility stocks like American Electric Power.
Considering all this, now could be a favorable time to invest in utility stocks, especially with operating cash flow being reasonably strong.
Keeping these factors in mind may be important before deciding on investments like Berkshire Hathaway.
In conclusion, a team of analysts recently outlined ten stocks they believe investors should focus on now—Berkshire Hathaway, notably, was not included. These stocks are expected to potentially provide substantial returns in the coming years.
