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Market Performance in 2024: A Buffett Portfolio Perspective
As of 2024, the markets have experienced a robust performance, with the S&P 500 showing an increase of roughly 18%. Yet, there are stocks that have surpassed this benchmark, particularly within Warren Buffett’s Berkshire Hathaway portfolio. This collection of investments includes some of the world’s leading stocks, offering both quality and safety for long-term investors. Notably, several of these stocks have significantly outperformed the broader market.
Standout Stocks in Berkshire Hathaway’s Portfolio
Among the notable investments in Berkshire’s portfolio this year are Amazon (0.91%), T-Mobile US (-0.10%), and American Express (0.09%). These stocks not only promise potential growth in the short term but are also solid choices for long-term holdings. Here’s a closer look at their performance and future prospects.
Amazon: Riding the AI Wave
Amazon, the e-commerce and tech behemoth, makes up a modest 0.6% of Berkshire’s portfolio. Despite its relatively small weight, Amazon has seen its stock value increase by 21% since the year’s start. This growth is partly driven by the company’s strategic moves in artificial intelligence (AI). Amazon has invested in Anthropic, a chatbot maker, and plans to invest a staggering $100 billion over the next decade to enhance its data center infrastructure. As businesses increasingly migrate to the cloud and develop AI models, data centers will become even more crucial.
In the realm of e-commerce, Amazon is launching a discount service to better compete with low-cost online retailers like Shein and Temu (owned by PDD Holdings). This initiative could further boost Amazon’s growth, which was at 10% in the latest quarter, with sales exceeding $148 billion for the period ending June 30.
Despite these promising developments, Amazon’s stock is trading at a relatively modest 44 times earnings. This is unusual for a stock that typically commands a higher premium, suggesting there may be more room for the stock to rally.
T-Mobile US: Expanding Horizons
T-Mobile US has experienced a 28% rise this year, reflecting its recent strong performance. The telecommunications company has reported impressive figures, such as its highest-ever postpaid phone net customer additions of 777,000 and reaching a milestone of 100 million postpaid customers.
Looking ahead, T-Mobile plans to acquire the majority of U.S. Cellular for $4.4 billion, which will extend its coverage in rural areas. This follows its acquisition of Sprint in 2020 for a much larger sum of $26 billion. T-Mobile’s relentless pursuit of growth and ability to attract customers solidifies its position as a leading telecom stock for long-term investors.
In Berkshire’s portfolio, T-Mobile represents an even smaller stake than Amazon, at just 0.3%. However, its strong brand and leadership status validate its inclusion and make it a classic Buffett stock to hold for the long haul.
American Express: A Financial Powerhouse
American Express stands out as the top-performing stock on this list, with its value rising by about 40% since the beginning of the year. Buffett’s affinity for major credit card companies is well-known, and American Express holds a special place as the second-largest holding in Berkshire’s portfolio, accounting for 13%, just behind Apple at 28%. Similar to the iPhone maker, American Express benefits from targeting a more affluent and less price-sensitive clientele.
This year, American Express saw its revenue net of interest expense climb by 10%, reaching $32.1 billion over six months. More impressively, net income surged by 37% to $5.5 billion, prompting an upward revision in earnings guidance. The company now anticipates full-year earnings per share to be around a midpoint of $13.55, up from the previous forecast of $12.90.
American Express’s strong performance and dedicated customer base make it a resilient choice for investors, even in challenging economic conditions.
Investment Considerations
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