Warren Buffett is among the greatest investors of all time. His advice has helped plenty of other investors do great too, including those who invested in his holding company. An investor who bought $100 worth of Class A shares in Berkshire Hathaway back when Buffett took over in 1965 would have turned that $100 investment into nearly $5.6 million today if they didn’t sell.
Buffett has picked plenty of winners for Berkshire over the years (and the occasional loser to keep him humble). Here are two great stocks from Berkshire Hathaway’s portfolio you might want to consider for your own portfolio. These two no-brainer investments could help you start building wealth of your own.
1. Amazon
Berkshire Hathaway held 10 million shares of Amazon (NASDAQ: AMZN) in the second quarter. It first disclosed the position in 2019. Whether Amazon was chosen by Buffett or one of his investing deputies, it fits the type of wide-moat business with a long runway of growth that Buffett typically favors.
The stock surged to new highs in 2024, but it’s still a great buy. While Amazon’s widely used online store is not growing all that fast anymore, the most profitable parts of the business are growing at double-digit rates and can drive the shares higher.
Amazon’s cloud computing business — Amazon Web Services — generates most of its operating profit and reported accelerating sales growth over the last year. The good news for new investors is that organizations are still in the early stages of migrating their data systems to the cloud, especially to use their data with artificial intelligence tools, which can fuel Amazon’s growth for many years.
Amazon is a no-brainer investment on many levels. It is No. 1 in cloud services and e-commerce, and it may also conquer the burgeoning retail media market. Advertising is currently its fastest-growing revenue source, now generating $51 billion in trailing-12-month revenue.
The growth in high-margin businesses like cloud and advertising is why Wall Street analysts expect the company’s earnings to grow at an annualized rate of 20%. This is enough growth to potentially double the value of Amazon stock within the next five years.
2. Visa
Berkshire held over 8.2 million shares of Visa (NYSE: V) in Q2. Visa is the largest card network with more than double the market share of its next largest competitor — Mastercard. The major card brands are some of the strongest businesses in the world. They are in everyone’s wallet, which means if you invest in these businesses, you are in a position to profit from all the card-related payments made around the world every day.
In addition to Visa, Berkshire also holds shares of American Express and Mastercard. However, Visa is the better stock to buy right now. Unlike American Express, Visa doesn’t issue cards and carries no credit risk. It focuses purely on payment processing, which is very difficult to duplicate by a competitor and allows the company to generate extremely high margins. Visa is also offering investors better value than Mastercard with a lower price-to-earnings multiple.
Visa has reported consistent growth. With the exception of the pandemic in 2020, Visa has reported double-digit revenue growth every year since 2017. Its high operating margin of 67% has also improved over that time to drive even stronger earnings growth.
Despite controlling over half of all card transactions, Visa continues to focus on driving higher usage of its branded and co-branded cards through partnerships with banks and fintech providers. Visa reported payments volume of $3.3 trillion in the most recent quarter, up from $2.2 trillion in the same quarter five years ago. Remarkably, management still sees a $20 trillion opportunity in consumer payments that are still made with cash, checks, and Automated Clearing House (ACH).
Analysts expect the company’s earnings to grow at an annualized rate of 12%. The stock trades at a reasonable forward price-to-earnings ratio of 22 on next year’s consensus earnings estimate, which should allow the stock to grow in line with future earnings. Investors can expect Visa shares to hit new highs for years to come.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
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Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,122!*
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Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,756!*
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Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $384,515!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
See 3 “Double Down” stocks »
*Stock Advisor returns as of October 14, 2024
American Express is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Berkshire Hathaway, Mastercard, and Visa. The Motley Fool recommends the following options: long January 2025 $370 calls on Mastercard and short January 2025 $380 calls on Mastercard. The Motley Fool has a disclosure policy.
