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As always, Warren Buffett’s holding company berkshire hathaway Berkshire Hathaway owns a portfolio of about 50 stocks, in addition to several entire companies. Investors looking to beat the market can get great ideas from following Buffett’s choices and listening to his many nuggets of wisdom. If he has $300 to invest after paying off his debts and saving as an emergency fund, visa (NYSE:V), New Holdings (New York Stock Exchange: NU)and floor and decoration (New York Stock Exchange: FND) These are the best Buffett stocks to buy right now.
1. Visa: Limited Competition for Credit Card Networks
Visa has carved out a broad niche in credit card processing, leveraging one of Buffett’s favorite features: long-term competitive advantage. It is the world’s largest credit card processing network, with a 12-month transaction volume of more than $15 trillion and more than 4.3 billion cards in existence worldwide.
Just as importantly, the upgrades haven’t stopped for a second. There is currently a wide economic moat, but that does not mean there is no competition that could easily replace it if there is a downturn. CEO Ryan McInerney, who took over last year, is a Visa veteran who has led the company’s strategy to build strong relationships with partner institutions and develop new technology to stay on top of the competition. is taking over.
Visa, which boasts a dominant position in the global economy, has grown along with the economy and has become a perennial top stock. In general, its performance reflects the economy. Visa works well when people have money to spend, and cardholders get a small cut every time they swipe their card. Vice versa, Visa has shown strong growth despite current economic fluctuations. Some of this is a result of the recovery from the pandemic-related decline, as evidenced by increased cross-border trade volumes. Total revenue for the first quarter of fiscal 2024 (ending December 31) increased 9% year-over-year to $8.6 billion, and earnings per share (EPS) increased 20% year-over-year to $2.39.
Visa boasts incredibly unmatched profit margins, reaching 57% in the first quarter. This means that more than half of every dollar earned is turned into profit. It also pays dividends that increase steadily.
Visa is a stock that has beaten the market for years and should continue to benefit investors.
2. New Holdings
Digital bank New Holdings is one of the few growth stocks in Berkshire Hathaway’s value-oriented portfolio. The company has some of the standard characteristics of a Buffett stock. In other words, it is a financial company that holds large amounts of cash. However, the company has recorded high growth, gaining market share not only in its home market of Brazil but also in emerging markets such as Mexico and Colombia.
Fourth quarter 2023 revenue increased 57% year-over-year, with the addition of 4.8 million new accounts for a total of 94 million. Not only do new accounts bring in increased revenue, but Nu also upsells and cross-sells new products, motivating low-paying customers to spend more time with Nu’s products and spend more money on the platform. We have a strategy to convert you into high-value users. Average revenue per active customer (ARPAC) continued to increase from last quarter, rising from $8.20 last year to $10.60 in the fourth quarter of this year.
This also affects the revenue cycle. Nu, which was not profitable under generally accepted accounting principles (GAAP) when it went public in 2021, has now reported six consecutive quarters of net income, up from $58 million in the fourth quarter of 2022 a year ago. This increased to $361 million in the same period.
Nu also has excellent credit risk management, which contributes to its success despite the region’s economic challenges. Brazil’s economy is even more unstable than that of the United States, with high inflation and interest rates above 10%. Nu’s deposits rose 38% year over year to $23.7 billion in the fourth quarter, and his interest-earning portfolio rose 91% to $8.2 billion.
Nu is shaping up to be one of the best growth stocks to own and should continue to outperform the market for some time to come.
3. Floors and decorations
Floor & Decor is a fairly small chain of warehouse-style stores that sell flooring products. So what caught Mr. Buffett’s attention? In some cases, the simplest model may offer the greatest potential. Floor & Decor is small, but that’s what makes it so appealing. We’re expanding rapidly, and just opening new stores is expected to drive growth over the next few years. Before inflation set in in 2022, the company reported strong comparable sales (comps) growth, indicating it’s a viable concept with long-term growth potential. . Its growth has slowed and Floor & Decor is now feeling pressure across its business. But smart investors look at the big picture.
For the full year 2023, sales increased by 3.5% year-on-year, but profit decreased by 7.1%. Operating margin was 7.3%, down 2 points from the previous year, and EPS was down 18% to $2.28. In 2024, management expects sales to increase by approximately 6.4%, profits to decrease by approximately 3.5%, and EPS to be approximately $1.95. His EPS for the fourth quarter was $0.34, down from 2022 but well above Wall Street’s expectations of $0.26.
The company opened 31 stores last year and plans to open 30 to 35 new stores this year. As of the end of 2023, the company operates 221 stores, and believes it can reach 500 stores within the next eight years.
These new stores provide an opportunity for revenue growth, even as revenues are under pressure. The home improvement industry has been hurt by rising interest rates and a weak housing market, as well as inflation that makes it difficult for customers to buy big-ticket items like flooring. But this is the kind of cyclical pressure that most companies feel at various points.
Floor & Decor has come a long way in growing new stores and operates an efficient model. Now is the perfect time to buy for long-term gains.
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Jennifer Cybill has a position in Wildebeest. The Motley Fool has positions in and recommends Berkshire Hathaway and Visa. The Motley Fool recommends Nu. The Motley Fool has a disclosure policy.
“The Best Warren Buffett Stocks to Buy Now for $300” was originally published by The Motley Fool.
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