Keith Speights, The Motley Fool
5 min read
What’s the best valuation metric for the stock market? Warren Buffett weighed in with his answer years ago.
The legendary investor wrote in a 2001 Fortune article that the ratio of total market capitalization to gross national product (GNP), which is now typically replaced by gross domestic product (GDP), is “probably the best single measure of where valuations stand at any given moment.” This ratio became so associated with him that it was nicknamed the “Buffett indicator.”
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Buffett also warned 25 years ago that when this ratio approaches 200% (as it did in late 1999 and early 2000), investors are “playing with fire.” And that brings us to today, with the Buffett indicator at 235.8%, slightly below its record high set in September 2026.
The “Oracle of Omaha” hasn’t held back from expressing his view that many stocks are priced unreasonably in the current market. However, that doesn’t mean that all stocks are too hot to touch. Here are three stocks still cheap enough to buy.
1. Enterprise Products Partners LP
One reason the stock market is so expensive relative to historical levels is that valuations of artificial intelligence (AI) stocks have skyrocketed. Is it possible to find a stock that benefits from the AI boom yet is attractively priced? Yep. Check out Enterprise Products Partners LP (NYSE: EPD).
This limited partnership (LP) owns more than 50,000 miles of pipeline that transport hydrocarbons, including natural gas and natural gas liquids (NGLs). The demand for these fuels has risen because they’re a great fit for powering AI data centers. Unsurprisingly, Enterprise Products Partners’ earnings jumped 28% year over year in its latest quarter to a record high.
But the pipeline stock trades at a reasonable level. Enterprise’s forward price-to-earnings ratio is 11.9. The LP’s unit price is only 8.4 times trailing 12-month adjusted cash flow from operations (CFFO).
Even better, Enterprise Products Partners offers an especially juicy distribution yield of over 6%. The midstream leader has increased its distribution for 27 consecutive years.
2. JPMorgan Chase
JPMorgan Chase (NYSE: JPM) was once part of Buffett’s Berkshire Hathaway (NYSE: BRKA) (NYSE: BRKB) portfolio. However, Buffett soured on bank stocks a few years ago and eventually fully exited his position in JPMorgan Chase in 2020.
