during Berkshire hathawaythis is (NYSE: BRK.A) (NYSE: BRK.B) Annual meeting last weekend, CEO Warren Buffett made the following statement:
Stocks have a huge advantage and … if you bet on America and hold that position for decades, you will do better than, in my opinion, much better than owning treasury securities.
Since the legendary investor took the helm of Berkshire in 1965, he has generated compound annual earnings of more than 20%, and by the end of 2019 his value had increased massively by 2,744,062%. Given its track record, investors could do much worse than following the example of the Oracle of Omaha.
At times like these, getting your emergency funds topped up should be a high priority. But if you’ve done it and you still have cash you don’t expect to need in the next three to five years – $ 3,000, for example, although any amount will suffice – c is the right time to invest in business. And among Berkshire Hathaway’s holdings, I think these three, in particular, have plenty of room to operate in the years to come.
If there is one industry that is obvious in times of economic uncertainty, it is probably the processing of payments. Even if consumers limit their spending to get through tough times, they still have essential purchases to make, and no company is better placed to benefit from this spending than Visa (NYSE: V).
The payments leader represented 53% of the purchasing volume of the credit card network in the United States, which represents nearly $ 2 trillion in payments processed in 2018 – overshadowing its three main competitors combined. Perhaps most importantly, unlike many of its major competitors, Visa does not lend money. This is a huge advantage at a time when unemployment is at an astounding 14.7% and the risk of default and credit default continues to increase.
Finally, the company still has a long way to go for growth, especially in international markets. Visa estimates that around the world people still make about $ 21 trillion in cash purchases each year, and there are nearly 2 billion consumers without payment accounts, which gives the business a great opportunity. potentially profitable market to exploit growth.
It cannot be denied that Apple (NASDAQ: AAPL) was hard hit by the COVID-19 pandemic. In its second fiscal quarter, which ended March 28, the company achieved revenue gains of just 1% year-on-year, thanks to the strength of its service and wearable segments. But sales of the iPhone – the biggest contributor to Apple’s revenue – fell 7%. To put this in context, revenues in its first fiscal quarter increased 9%, while iPhone sales jumped 8%.
However, all is not lost for Apple. In a somewhat prescient step, he recently reintroduced an iPhone SE at a lower cost, a move he had anticipated for some time. With a starting price of just $ 399, the device should appeal to budget-conscious smartphone buyers who would otherwise have waited for the upgrade.
Then there is the Apple services segment, where revenues increased 17% year over year to a historic high in the last quarter, despite headwinds from the coronavirus – or perhaps helped by them. The success was widespread, with record sales on the App Store, Apple Music, video and cloud services, as well as in most countries. Clearly, the segment has received a boost from consumers under home orders.
The handheld, home and accessories segment also had a record quarter, with revenues up 23% year-over-year, driven by strong demand from AirPods and Apple Watch.
This stock is still selling for below its pre-coronavirus levels, but once investors realize that Apple is not a brink, this sale will not last long.
While Amazon (NASDAQ: AMZN) may not tick all of Buffett’s typical stocks, the legendary investor’s perspective is well documented.
Amazon has “far exceeded anything I could have dreamed of. Because if I really thought it could have been done, I should have bought it,” said Buffett in 2018. “I didn’t know it had the potential. I blew it up. “
It should also be noted that it was not Buffett who ultimately supported Berkshire’s portfolio, but one of his high-profile subordinates, probably Todd Combs or Ted Weschler.
After initially falling as the pandemic began to hit the United States, Amazon’s stock recovered these losses and continued to rise, holding much better than most stocks since mid-February. Since the start of the year, it has now increased by around 29%, while the S&P 500 is still down about 9%. Amazon services, from e-commerce to video streaming, and cloud computing to Twitch, became essential to consumers and businesses during the pandemic.
The tech titan released its first quarter results last week, and the results have been remarkable. Net sales increased 26% to almost $ 76 billion and the company generated $ 4 billion in operating profits, despite headwinds from coronaviruses. Amazon has a bold vision to adapt to these unprecedented conditions, and plans to spend $ 4 billion over the next quarter to reduce the risk of its employees contracting COVID-19 at work or exposing it to customers . The news of this massive spending initially pushed the stock down, but it’s classic for Amazon to look far into the future.
E-commerce accounted for only 11% of total retail sales in the United States and the trend continues to gain momentum. The new customers and new spending that Amazon acquired during the pandemic will still be around long after the crisis ends, with more to come.