For nearly six decades, Warren Buffett, CEO of Berkshire Hathaway, has consistently outperformed the S&P 500, delivering a staggering 5,544,952% cumulative return in his company’s Class A shares. The “Oracle of Omaha” is known for his investment strategy, focusing on profitable, time-tested businesses with sustainable competitive advantages and solid management teams. As we enter the fourth quarter of 2024, two exceptional stocks in Berkshire’s $315 billion portfolio stand out as compelling buys.
The first is satellite-radio operator Sirius XM Holdings. Following its merger with Liberty Media’s Sirius XM tracking stock and a 1-for-10 reverse stock split, Sirius XM has become a more attractive option for institutional investors. As the only licensed satellite-radio operator, it enjoys strong subscription pricing power and a predictable cost structure. With Spotify Technology recently raising its subscription cost, Sirius XM has an opportunity to follow suit and boost its sales. Its revenue diversity, with less than 20% of net sales coming from advertising, provides a competitive edge. At a forward price-to-earnings ratio of 7.5 and a 4.4% annual yield, Sirius XM is a standout bargain.
The second unstoppable Warren Buffett stock is payment processor Visa. Despite facing a potential DOJ antitrust suit, Visa’s dominance in the debit card market and its juggernaut status in credit transactions make it an attractive investment opportunity. With a huge opportunity for growth in cross-border payment volume, particularly in underbanked emerging markets, Visa’s strong cash flow and deep pockets position it for continued success. Its avoidance of lending also provides a competitive advantage, shielding it from credit delinquencies and loan losses during economic downturns. At a historically low valuation of less than 25 times forward-year earnings per share, Visa is a clear-cut buy.
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