Warren Buffett has been regarded as one of the richest people in the world, and much of his fortune has been the result of careful and patient investment decisions which he made in stocks in the financial industry. The man carries out the operations through investment holding company, Berkshire Hathaway. To no surprise, his company has been categorised as one of the most valuable companies globally. The company’s shares trade on the US exchanges under two tickers i.e., Berkshire Hathaway Inc. (NYSE: BRK-A) and Berkshire Hathaway Inc. (NYSE: BRK-B). Firm’s market cap came at ~$786 billion, making the company nearly a trillion-dollar brand. All this is true despite of the fact that his company doesn’t operate in the technology industry just like other trillion-dollar brands including Apple Inc., Microsoft Corporation, etc. Therefore, investors are always keen about the stocks favoured by Wall Street analysts and Warren Buffett.
It goes without saying that big technology mega-cap companies have been valued at several time than Berkshire Hathaway. However, Mr. Buffett’s firm’s status has been clear if we compare its ~$786 market cap to value of world’s biggest bank, JPMorgan Chase & Co. Its market cap hovers around $445 billion. Therefore, even though the company has trillions of dollars’ worth of assets, it is significantly less valuable than Mr. Buffett’s beast (Berkshire). One asset which Mr. Buffett made use of during his career as a fund manager is time. Therefore, he believes that effective time utilisation comes in the form of value investing. That is to say that, invest in the company and stay invested for the long-term. This is why retail investors continue to track the stocks favoured by Wall Street analysts and Warren Buffett.
One of the most common ways to determine stock’s fair value is with the help of analyst estimates. Wall Street analysts work for financial firms and they plan to spend hours and days in analysing balance sheets, income statements, and several other economic factors which might impact the stock price in the short-term and long-term. Basis this research, they give the stock ratings and a particular price target.
With this in mind, we will now have a look at the stocks favoured by Wall Street analysts and Warren Buffett.
1. Nu Holdings Ltd.-stocks by Wall Street and Buffett
The company provides digital banking services and offers numerous financial services including credit cards, personal account, investments, etc.
It has released its 3Q23 financial results, in which the company continued to report higher profitability and saw net income of $303.0 million, with its annualized ROE coming at 21% in comparison to $7.8 million profit in 3Q22. Adjusted net income of the company touched $355.6 million with annualized adjusted ROE coming at ~25% against adjusted net income of $63.1 million in 3Q22. The company saw these strong profitability levels, while maintaining significant investments for future products and geographic expansion. It delivered strong revenue growth rate.
The company saw $2.1 billion in revenues, exhibiting 53% growth FXN from 3Q22 and 4 times increase in only 2 years FXN. This was due to the compounding effect of customer growth and increased levels of customer monetization.
Gross profit of the company expanded to $915 million, exhibiting a 100% growth year-over-year FXN. Gross profit margin saw an expansion once more to 43%. This has solidified is upward trajectory which was initiated last year.
On September 30, 2023, the company interest-earning portfolio (IEP) of $6.7 billion. Focus of the company is on optimizing balance sheet, as exhibited in its 35% loan-to-deposit ratio, that increased from 25% from the previous year.
The company’s shares have been rated as “Buy” on average, with the price target coming at $9.66.
2. Snowflake Inc.-stocks by Wall Street and Buffett
The company is engaged in delivering Data Cloud, which is a global network in which thousands of organizations mobilize data having approximately unlimited scale concurrency and performance.
It has released its financial results for 2Q ended fiscal 2024, in which its product revenues came at $640.2 million, exhibiting ~37% year-over-year growth. Net revenue retention rate of the company came in at 142%. Non-GAAP adjusted FCF of the company came at $88 million, exhibiting 50% year-over-year growth. The company, which has been categorised as a global epicenter of trusted enterprise data, is well-placed to enable strong interest in AI/ML.
For 3Q24, the company expects its product revenue of between $670 million – $675 million, which exhibits a year-over-year growth of 28% – 29%. For FY24, the company anticipates product revenue of ~$2,600 million, exhibiting year-over-year growth of ~34%.
Significant shift to cloud computing and huge advancements made in computing supported the company in beating the analysts’ EPS expectations in 4 of its latest quarters. Mr. Buffett’s Berkshire Hathaway has ~6.1 million shares of the company during 3Q23. These holdings equate to ~$935 million. Coming to the Wall Street estimates, the company’s average share price target has been set at $197.66, with analysts giving “Buy” rating on its shares.
3. Charter Communications, Inc.-stocks by Wall Street and Buffett
The company was formed after 2016 merger of 3 renowned cable companies i.e., Legacy Charter, Time Warner Cable, and Bright House Networks.
It has released its financial and operating results for 3 and 9 months ended September 30, 2023. In 3Q, its total residential and small and medium business Internet customers saw an increase of 63,000. As at September 30, 2023, the company had a total of 30.6 million residential and SMB Internet customers.
3Q revenue of the company came in at $13.6 billion, exhibiting a rise of 0.2% year-over-year as a result of residential internet revenue growth of 3.7%, residential mobile service growth of around 33.8% and other revenue growth of approximately ~28.8%, mainly because of higher mobile device sales.
Its shares have been rated as “Buy” on average, with the analysts giving average share price target of $471.66.
Conclusion
While above are some of the stocks favoured by Wall Street analysts and Warren Buffett, there are other stocks also such as Jefferies Financial Group Inc., T-Mobile US, Inc., etc. Difference between the price target of the analysts and market price describes whether the stock is undervalued or overvalued. This helps investors in making rational investment decisions.
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