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Citigroup Likes the Fit of Warren Buffett's Underwear

Tickers in this article: DE HBI BRK.B JNJ BRK.A

After the deleveraging we see Hanesbrands as a classic Warren Buffett investment - low debt, high free cash flow, high scale/market share, stable returns, and low cash usage...all for a cheap price, in our view," writes Anderson. The analyst notes that Buffett already owns Hanesbrands biggest competitor Fruit of the Loom .

Currently, the company is paring debt and implementing a strategy to increase prices and profit margins throughout its array of underwear and garment products, according to Anderson.

"We believe a solid dividend (barring changes to dividend taxes), share repurchases, and bolt-on acquisitions are all part of this strategy," the analyst adds.

Anderson gives Hanesbrands a $37 a share price target, but says the company could see shares rise as high as $50, were commodity price inflation to pass and earnings to grow as expected.

For more on actual Warren Buffett investments, see why Wells Fargo's generally mixed third-quarter earnings and a fall in key interest rate-based revenue that augurs poorly for 2013, the bank's largest investor Warren Buffett of Berkshire Hathaway (BRK.A) faces one of his biggest post-crisis investing challenges.

Also see why improving earnings per share math at Goldman Sachs as may give Buffett reason to begin putting money behind the common stock of Wall Street titans.

In the third quarter, Berkshire Hathaway opened a position in machinery giant John Deere (DE ) and the investing conglomerate pared most of what one was a multi-billion dollar stake in healthcare giant Johnson & Johnson (JNJ )

-- Written by Antoine Gara in New York