Berkshire Hathaway’s (BRK.A) (BRK.B) track record of success in the investing world is virtually unparalleled. Since CEO Warren Buffett purchased a controlling stake in the company and became its leader in 1965, the investment conglomerate’s share price has risen more than 2,768,000%. That means that if you owned and held a $1,000 equity position when the Oracle of Omaha bought the company, it would now be worth roughly $27.7 million.
Berkshire’s current size and risk-averse approach to investing mean it’s unlikely that the investment conglomerate will manage to match that outsized performance going forward for new investors with $1,000 available to put toward stock purchases. Still, Berkshire continues to grow at a healthy rate and it does happen to own shares in some forward-looking technology companies that could deliver big returns for long-term investors.
If you’ve got $1,000 available that you don’t need to pay bills, bolster an emergency fund, or reduce short-term debts, you might want to put it toward the purchase of some Berkshire-backed stocks that actually could take your portfolio to the next level. Read on for a look at five Berkshire holdings that have the potential to crush the market.
If you want to know what Buffett’s favorite stock is, you don’t have to read tea leaves or check horoscopes and planetary alignments. Berkshire’s quarterly 13F portfolio disclosure filings show the obvious answer. Apple (AAPL) stock is the investment conglomerate’s largest holding, by far, and accounts for nearly 44% of its total stock holdings.
Speaking on the company’s incredible brand strength and customer loyalty, Buffett recently said, “If you’re an Apple user and somebody offers you $10,000, but the only proviso is they’ll take away your iPhone and you’ll never be able to buy another, you’re not going to take it.” Apple’s dominance in the mobile hardware space has made it one of the world’s most profitable companies, and it doesn’t look like the tech titan is in any danger of losing its industry-leading position anytime soon.
While Apple’s strengths have helped it hold up better than most other tech stocks, shares are still down roughly 9% from their high. Thanks to the company’s mobile empire, an impressive software and services ecosystem, and untapped growth opportunities in categories including augmented reality and smart cars, the tech leader has clear avenues to continue beating the market.
Amazon (AMZN) spearheaded the growth of the e-commerce and cloud infrastructure services, and there’s a very good chance that it will continue to be one of this century’s strongest and most influential companies. While the tech giant’s core e-commerce and cloud businesses have faced some macroeconomic headwinds over the last year, Amazon retains leadership positions in both categories, and these two business pillars still look poised for big growth over the long term.
Beyond e-commerce and cloud infrastructure services, Amazon also has massive growth opportunities in other categories. The company has already used advantages created by its online retail platform and data expertise to build the U.S.’s third-largest digital advertising business, and it has plenty of untapped expansion potential in the ads market. Amazon’s recently announced Bedrock artificial intelligence (AI) service for building and scaling applications could also be a game changer, and it’s likely that AI technologies will spur a wide range of improvements across various aspects of the overall business.
With its incredible breadth of competitive advantages and vast long-term growth potential still ahead, Amazon looks like a smart buy for long-term investors.
StoneCo (STNE) is a Brazil-based fintech company that provides small and medium-sized businesses (SMBs) with payment processing services. It’s also been a provider of loans for SMBs, but this part of the business has struggled due to challenges related to the coronavirus pandemic and a reliance on data that proved to be insufficient for assessing whether businesses were creditworthy.
StoneCo still carries roughly $79 million in bad debt in its loan portfolio, but the company still managed to grow sales by roughly 99% last year, and non-GAAP (adjusted) net income soared 520% in the period. Yet, despite the business growing at an impressive clip and being on track to cover the remaining debt in its portfolio, the company’s share price remains down roughly 87.5% from its high.
With the business growing rapidly, StoneCo looks cheaply valued trading at roughly 19 times this year’s expected earnings and 1.6 times expected sales.
Like StoneCo, Nu (NU) is a fintech company based in Brazil. The company provides digital banking services and also operates in Mexico and Columbia, and it’s been growing at a rapid pace.
The company closed out last year with 74.6 million total customers, up 38.6% year over year, and sales and earnings have soared thanks to new customer additions and higher levels of engagement from those already using its services. Nu’s sales surged 128% year over year in the fourth quarter, and net income surged to $113.8 million from $3.2 million in the prior-year period.
Due to macroeconomic pressures, the company’s share price trades down roughly 58.5% from its high, and investors have an opportunity to buy the stock at levels that leave room for big upside. Nu is on track to benefit from exploding demand for digital banking services in Latin America, and it could deliver market-crushing returns for long-term shareholders.
Snowflake (SNOW) is a leading provider of data warehousing and analytics tools. The company’s Data Cloud platform makes it possible for businesses to combine and analyze information that comes from distinct cloud infrastructure services.
According to a survey conducted by S&P Global Intelligence, 98% of enterprise respondents said they either intended to use or were already using cloud infrastructure services from two different providers. Some 31% of respondents in the survey were already using four or more cloud infrastructure providers. The business world is already heavily dependent on multi-cloud setups, and Snowflake is positioned to play a key role in fostering the evolution of analytics, machine learning, artificial intelligence, and a wide range of other technologies and services.
Trading down 65% from its high, this Berkshire portfolio component looks like a worthwhile buy for growth-oriented investors.
— Keith NoonanWhere to Invest $99 [sponsor]
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