Any number of financial analysts, experts and asset managers would be eager to guide you about how to go about investing the Warren Buffett way. Yet, few have managed to match the success of this plain talking veteran who has consistently outperformed most other investors over an extended period. Buffett is always market-relevant, but there has been some additional focus on him over the last month following the release of the details of his annual portfolio holdings.

Additionally, his sage investor advice, in the form of his annual letter to shareholders of Berkshire Hathaway Inc. (BRK-B - Free Report) , grabbed headlines last week. But it’s not that his investing approach is without its fair share of detractors.

One common criticism of his technique is that he has to continue to buy into larger stocks. This limits the extent of price appreciation even if one holds the stock for an extended period. Even so, his approach has helped investors reap dividends over an extended period and picking up Buffett’s portfolio picks which carry a good Zacks Rank continues to make for a great investment option.

Concentrating on Large-Cap Holdings

Buffett’s $150 billion portfolio is heavily concentrated around his top 10 holdings. In fact, his top three holdings, namely, The Kraft Heinz Company KHC, Wells Fargo & Company (WFC - Free Report) and The Coca-Cola Company (KO - Free Report) account for 19.2%, 17.9% and 11.2% of his total portfolio, respectively. A cursory look at the others towards the top of the holdings charts also offers similar results.

And Buffett is expanding his position in several of these behemoths. Recently, Berkshire raised its ownership in Apple, Inc. (AAPL - Free Report) by a whopping 277%. This is only natural given the company’s fiscal first quarter performance and rising optimism around the release of the much awaited iPhone 8.

The veteran investor outlined his central tenet of investing once again in his annual letter to Berkshire shareholders. According to Buffett, investors who can avoid incurring substantial costs and hold a portfolio of large, domestic companies which rely on conservative methods of financing are setting themselves up for good returns.

Case for Investing in Airlines

One of the highlights of Buffett’s recent portfolio-related disclosures was the heightened exposure to the airline sector. Buffett added Southwest Airlines (UAL - Free Report) to his holdings and raised his positions in American Airlines Group AAL, Delta Air Lines (DAL - Free Report) and United Continental Holdings (UAL - Free Report) . This is a significant development, given that Buffett had shunned the sector for a long time until last November. Until only recently, the sector was battling multiple headwinds, and this comes as great news for airlines stocks.

But Buffett’s decision is easily understandable, since in this case, the value investor in him has come to the fore. The industry currently has a trailing 12-month EV/EBITDA ratio of 5.9, which is favorable compared to what the industry saw in the last two years. The ratio is almost near the low end of 4.7 during the period.

Additionally, the reading compares favorably with the market at large, as the current EV/EBITDA for the S&P 500 is at 11 and the median level is 9.83. The industry’s favorable positioning compared to the overall market certainly signals more upside.

Our Choices

It seems that Buffett’s approach is not that outdated after all and may actually be in sync with today’s market realities. But given that many of his holdings have been held for a long period, which of his holdings would you choose to pick up today?

This is borne out by the fact that of the 46 stocks in Buffett’s portfolio, more than 30 carry a Zacks Rank #3 (Hold). But the Oracle of Omaha’s holdings still offer some smart investor choices. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.

General Motors Company (GM - Free Report) beat both earnings and revenues expectations during the fourth quarter. Additionally, the automaker has a positive record of earnings surprises in recent quarters.

General Motors’ earnings estimate for the current year has improved by 5% over the last 60 days. The forward price-to-earnings (P/E) ratio for the current financial year (F1) is 6.24, lower than the industry average of 10.65. The stock has returned 5.3% over the three months, underperforming the Zacks Automotive - Domestic sector, which has gained 7.1% over the same period.

This provides a good opportunity to buy the stock given that there is significant upside potential. The stock has a Zacks Rank #1. 

The Goldman Sachs Group, Inc. (GS - Free Report) fourth-quarter results outpaced expectations on high fixed-income revenues and lower expenses. The banking major is poised to benefit from rising rates and tighter credit spreads.

Goldman Sachs has a Zacks Rank #2 (Buy). Its expected earnings growth for the current year is 18.3%. Its earnings estimate for the current year has improved by 2.9% over the last 30 days. The stock has returned 7.6% over the last three months, outperforming the Zacks Financial - Investment Bank sector, which has gained 6.2% over the same period.

Restaurant Brands International Inc. (QSR - Free Report) is the parent company for Tim Hortons Inc. and Burger King Worldwide, Inc.

Restaurant Brands International has a Zacks Rank #2. The company has expected earnings growth of 13.4% for the current year. Its earnings estimate for the current year has improved by 2.8% over the last 30 days. The stock has returned 10% over the last three months, underperforming the Zacks Retail - Restaurants  sector, which has lost 3.2% over the same period.

Visa Inc.’s (V - Free Report) fiscal-first quarter 2017 earnings outpaced expectations while revenues exhibited year-over-year growth

Visa has a Zacks Rank #2. The company has expected earnings growth of 16.5% for the current year. Its earnings estimate for the current year has improved by 0.9% over the last 30 days. The stock has returned 11.9% over the last one year, outperforming the Zacks Financial Transaction Services sector, which has gained 9.2% over the same period.

VeriSign Inc.’s (VRSN - Free Report) fourth quarter earnings and revenues easily surpassed expectations. Though, at present the revenue share of this business is relatively small compared to the registry business, there is significant scope for growth going forward.

VeriSign has a Zacks Rank #2. The company has expected earnings growth of 7.7% for the current year. Its earnings estimate for the current year has improved by 0.4% over the last 30 days. The stock has returned 4.7% over the last one year, underperforming the Zacks Internet - Software and Services sector, which has gained 15.3% over the same period. This provides a good opportunity to buy the stock given that there is significant upside potential.