Warren Buffett’s Secret Bargain: This Ridiculously Cheap Stock Could Make You Richer
Forget waiting for the next crypto bull run—traditional finance just handed investors a golden opportunity. While everyone's chasing meme coins and DeFi yields, Warren Buffett's quietly stacking shares in a company trading at fire-sale prices.
The Oracle's Discount Play
Buffett's Berkshire Hathaway has been accumulating positions while retail investors sleep on this legacy player. The numbers don't lie—current valuations sit at historic lows despite solid fundamentals. This isn't some speculative tech stock; it's a cash-generating machine trading like it's 2008.
Why Wall Street's Missing the Signal
Analysts remain obsessed with growth narratives while ignoring plain old value. Meanwhile, Buffett's buying what others won't touch—because he knows panic creates opportunity. The same investors pouring into overhyped IPOs are ignoring a proven wealth-building asset.
Timing the Traditional Markets
While crypto traders watch BTC dominance ratios, value investors are loading up on this overlooked gem. It's not sexy—it won't 100x overnight—but it's got something most altcoins lack: actual revenue. The stock's trading at multiples that make even stablecoins look overvalued.
Final Trade: Old Money Beats New Hype
Sometimes the best plays aren't in your Coinbase portfolio. While crypto bros argue about tokenomics, Buffett's quietly building positions in actual businesses. Because nothing beats cold hard cash flow—not even the slickest white paper in DeFi. Traditional finance's loss could be your gain—if you're willing to think like the Oracle instead of following the crowd.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
One of them was(CB 2.15%). Berkshire initiated a position in the American-Swiss insurance giant in the third quarter of 2023, and it continued to accumulate the stock in the first half of 2024. Today, that position is worth $7.4 billion, which gives it a 6.8% stake in the company and accounts for 2.5% of Berkshire's equity portfolio.
Chubb isn't an exciting stock, but it's a cheap evergreen play that should continue growing in bull and bear markets. Let's see why it could make you richer over the long term.
What does Chubb do?
Chubb, which is based in Zurich, Switzerland, employs about 43,000 people and operates in 54 countries and territories. It's the world's largest publicly traded provider of property, supplemental, health, and casualty insurance policies. It was known as ACE Limited until 2016, when it acquired the original Chubb and adopted its brand as the name of the combined company.
Big insurance companies are well insulated from macroeconomic headwinds because even when consumers and businesses need to cut their spending, they don't generally cancel their insurance policies. Chubb has also been growing rapidly outside of the U.S., where it generated 43% of its revenue in 2024.
That's why Chubb's consolidated net premiums consistently increased over the past six years -- even as the COVID-19 pandemic, inflation, rising interest rates, geopolitical conflicts, trade wars, tariffs, and other macro headwinds rattled the global economy. Most of its revenue still comes from its Core property and casualty (P&C) insurance policies.
|
Consolidated net premiums growth |
5.5% |
4.8% |
12% |
10.3% |
13.5% |
8.7% |
|
Core operating income* per share growth |
7.1% |
(27.7%) |
7.8% |
21.3% |
48.5% |
(0.1%) |
Data source: Chubb Limited. *Net of tax.
Chubb's combined P&C ratio -- which is calculated by adding its total claims (losses) to its expenses, dividing that total by its premiums earned, and multiplying that figure by 100 -- came in at 86.6% in 2024. An insurance company's P&C ratio must stay below 100% for its business to remain sustainable (since its paid claims shouldn't exceed its premiums earned), and Chubb's ratio remains far below the U.S. P&C insurer's industry average of 96.6%. That low ratio reflects Chubb's prudent approach toward insuring its customers and processing its claims. It has also been using more AI services to further streamline and automate that process.
Chubb's CORE operating income per share dipped slightly in 2024, but that was only because the 2023 figure was boosted by a one-time tax benefit. From 2024 to 2027, analysts still expect its earnings per share (EPS) to grow at a compound annual rate of 8%. That's a solid growth rate for a stock that trades at 12 times earnings. It also pays a dividend with a forward yield of 1.4% at the current share price, and its low payout ratio of 16% gives it ample room for future hikes.
How Chubb could make you richer over the long term
Chubb stock won't generate huge gains in the next one or two years, but it should grow gradually. Assuming the company matches analysts' consensus estimates, continues to grow its EPS at a compound annual rate of about 8% from 2027 to 2035, and trades at a more generous 15 times forward earnings by the final year of that period, its stock price could nearly triple to more than $800 in a decade. That's probably why Buffett stayed bullish on Chubb even as he pruned many of Berkshire Hathaway's other stock positions.
