As perhaps the most successful investor in history, it’s safe to say that Warren Buffett knows a lot when he sees one. The Oracle of Omaha has taken over Berkshire Hathaway in 1965 and guided the company to a 2,712,400% return throughout his tenure – good enough to turn a $1,000 stake in the company in 1965 into over $27.1 million if it was detained throughout.
With this kind of incredible performance, it’s no wonder so many investors are paying close attention to Buffett’s public statements and stock buying moves. Read on to discover three Berkshire Hathaway portfolio companies that are trading at deep discounts and have what it takes to deliver above-market returns.
You may have heard someone say, “data is the new oil”. With multiple supply constraints driving energy prices soaring right now, oil is probably the new oil from today’s stock market perspective, but it would be a mistake to lose sight of just how much the Access to valuable data and analytics will be important to business success. the next decade and beyond.
Snowflake (NYSE: SNOW) provides a platform that allows data from isolated cloud platforms to be combined and analyzed, and it also operates a marketplace that allows business customers to sell their data and buy data from other providers. While the company forecasts an otherwise impressive 66% annual sales growth this year, this marks a substantial deceleration from the annual revenue growth of 106% this year, and investors have generally abandoned companies that do not show not yet significant benefits.
With a multitude of factors creating volatility in the market right now, growth dependent software companies may not be easy to trust, but Snowflake is a class leader that looks poised to deliver long-term shareholder returns.
StoneCo (NASDAQ:STNE) Stocks were crushed on the back of the fintech equity market drop and some substantial company-specific headwinds. With pandemic-related conditions resulting in slower-than-expected economic growth and high inflation in Brazil, StoneCo is operating in a challenging macroeconomic environment. Worse still, regulatory changes in the country led to major losses on its credit business and temporarily halted lending to small and medium-sized businesses.
The company’s stock price is down about 39% year-to-date and 89% from its peak last February. These factors have combined to crush enthusiasm for StoneCo shares, but this is one case where I think risk-tolerant investors could benefit from jumping on a company with a battered valuation.
Following the significant pullback in valuations, StoneCo now has a market capitalization of around $3.2 billion and is valued at around twice this year’s expected sales and 24 times expected earnings. Due to the challenges facing the company’s credit business, earnings performance could be bumpy in the near term, but the company’s payment processing business continued to add new merchant customers to a encouraging pace.
The shift from cash to card and app payments in Brazil and other Latin American markets is still in its early stages, and StoneCo’s leadership position in driving this shift gives it the potential to exceed expectations and bounce back to deliver shareholder gains.
As a value stock backed by a strong company and a big dividend, it’s no surprise that Verizon Communications (NYSE:VZ) has held up relatively well against more growth-dependent stocks amid the recent turmoil that has rocked the market. However, the stock is down about 6% in the past year and 11% from its 52-week high. It’s also down significantly from the fourth quarter of 2020, when Berkshire Hathaway initiated a position in the stock that made it the investment conglomerate’s seventh-largest equity portfolio.
Verizon operates the largest and highest-rated mobile wireless network in the United States, and the mission-critical nature of connectivity and high levels of customer satisfaction suggest the company should continue to generate sales, profits and revenues. strong free cash flow, even in the face of macroeconomic pressures. . After investing billions in wireless infrastructure and spectrum band, the telecom giant is still in the early stages of benefiting from the deployment of 5G network technology.
With its great brand strength, impressive dividend and reasonable valuation multiples, Verizon has the hallmarks of Buffett prices. The shares are trading at less than 10 times this year’s expected earnings, and the company’s current dividend yield sits at an attractive 4.8%. The company has now increased its dividend every year for 15 consecutive years, and it is likely that shares bought today will generate an even higher yield thanks to future payout hikes.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.