These three Berkshire Hathaway holdings will be in most investors' portfolios.
Warren Buffett's stock picks may not be flashy, but that's the point. Given enough time, the value will be realized. And in Buffett's case, Berkshire Hathawayit is often exceeded. It would be wise to borrow some of his ideas whenever possible.
To that end, let's take a closer look at three Berkshire stocks to add to your portfolio this month.
1. Visa
Berkshire Hathaway does not own large stakes in credit card companies. visa (V 0.39%)for the record. The company's 8.3 million share position is only worth about $2.3 billion. This is less than 1% of Berkshire's total stock holdings (and less than 1% of Visa itself).
However, don't mistake this relatively small position as an indication that the company's potential is limited. It's not just that the payments market is moving away from cash. It has adopted a digital ecosystem that allows Visa to offer its merchants and institutional customers.
Case in point: earlier this year, the payments intermediary introduced a platform built specifically for Latin American governments. These tools include ways to collect tax revenue, streamline the purchase of government assets, and even make public spending such as economic stimulus and social assistance.
Also, earlier this year, Visa announced technology that allows merchants to not only accept card-based payments but also build their own customer loyalty programs. Each such tool expands Visa's reach and depth, and ultimately its reach and revenue.
And the numbers back it up. Although the global economy has been quite weak this year, Visa's third-quarter revenue was up 10% year-over-year on a 7% increase in total payments, continuing a trend that has been in place for a year. This is not huge, but it clearly outpaces global economic growth.
Analysts expect this pace of top-line growth to continue for at least a few more years, but (in addition to the introduction of new profit centers that strengthen the connection between merchants and consumers) other Given the range of opportunities to replace payment forms, this is likely a growth that could continue for many years.
By the way, past revenue growth and future revenue growth are further accelerating, driving profit growth. This is a high-margin business that can be scaled up very cost-effectively.
2. Western oil
It would be easy to place oil and gas stocks as western oil (Oxy 1.77%) It will be forgotten forever, especially considering the recent decline in this stock along with oil. Not only are greener alternatives now available, but the 20% drop in oil prices since April has highlighted how easily this business can and will be rattled by unpredictable geopolitical tensions. I am reminded of what I should do. It's not worth it.
Exceptionally, perhaps it is teeth At least for Warren Buffett, it's worth it. There's a reason Berkshire not only sticks with it, but keeps Occidental, currently worth around $13 billion, in the No. 6 spot. That's because oil (and gas) is far from on its deathbed.
Don't misread the message. Alternative energies such as solar and nuclear power are here to stay. Even in the relatively developed United States. But fossil fuels still account for about 60 percent of total public electricity production, with renewables generating only about one-fifth of that, according to the U.S. Energy Information Administration. Considering cars, crude oil alone accounts for more than a third of the country's annual energy consumption, and natural gas accounts for another third.
Connecting the dots, it could take years for an alternative energy source to replace oil as the country's primary power source, especially given the ever-increasing demand for electricity. Assume the same is true for other parts of the world.
To this end, the U.S. Energy Information Administration believes that crude oil could still be the planet's single largest source of electricity by 2050. Drilling for, extracting, and refining oil yields huge profits. In the meantime.
There are clearly some solid oil and gas stocks that would be a good fit for your portfolio. But Buffett is positive about Occidental Petroleum and its management team. In his 2023 annual letter to Berkshire Hathaway shareholders, he wrote:
“Under Vicki Hollove's leadership, Occidental is doing what's right for both the country and its owners. No one knows what oil prices will do in the next month, year, or decade. But Vicki knows how to separate oil from rock, which is an extraordinary talent and valuable to both her shareholders and the country.”
It may be wise to trust Warren Buffett's personal judgment on this.
3. New Holdings
add at the end New Holdings (NU 0.99%) Add it to your list of Warren Buffett stocks to buy in October. It's not a common name. In fact, there's a good chance you've never even heard of it. However, don't be discouraged just because you're not familiar with it.
There's a reason you haven't heard of it. That's because Nu Holdings is an online bank founded to serve the Latin American market. The company already boasts more than 100 million customers across Brazil, Mexico, and Colombia, and this is just scratching the surface of the ultimate opportunity. South and Latin America is home to more than 600 million people, most of whom have only recently been given a reason to explore such options.
And that's the key to understanding Buffett's interest in this seemingly unlikely Berkshire Hathaway holding.
In other words, Latin America is now in many ways what North America was 20 years ago. Back then, high-speed internet was still in its infancy, and smartphones were relatively uncommon. But we were at the revolutionary intersection of both technologies, where shopping, entertainment, banking, and information would be available to everyone through their mobile devices.
Perhaps the biggest difference between here and there is that Latin America is evolving as a “mobile-first” market. This means that most consumers use their smartphones as their primary web connection.
Either way, this is the perfect market for Nu Holdings' products. Market research firm Technavio suggests that the region's banking-as-a-service market is expected to grow at more than 19% annually until 2028, in line with other forecasts.
And Nu is clearly already capitalizing on this growth. Last quarter's currency-adjusted revenue increased 65% year-over-year, resulting in net income more than doubling.
For Berkshire Hathaway, this isn't a big position. As of the latest count, Berkshire owns just under $1.5 billion in foreign online banks. But the fact that Buffett and his lieutenants own this little-known company speaks volumes about its potential.
