Warren Buffett is considered one of the most successful investors of all time and is currently the Chairman and CEO of Berkshire Hathaway Inc. (BRK.A) (BRK.B), a multinational holding firm. Berkshire Hathaway primarily owns shares of blue-chip companies possessing attractive valuations, strong fundamentals, and high growth potential.
Buffett is known for his phenomenal investment strategies. He is primarily a buy-and-hold investor who believes in hanging on to stocks for a long duration for high returns. Due to his impressive track record, his portfolio has been an investment guide for many investors for decades.
Buffett’s Berkshire Hathaway BRK.A has gained 4% over the past month and 3.6% over the past year, while BRK.B has gained 4.2% over the past month and 4% over the year.
Considering its solid fundamentals and growth prospects, Warren Buffett holding Visa Inc. (V) could be an excellent addition to your portfolio. However, another Buffett stock, Snowflake Inc. (SNOW), doesn’t look well-positioned to survive the current market turmoil. So, it could be best avoided now.
Stock to Buy:
Visa Inc. (V)
V is a leading payments technology company that facilitates digital payments among consumers, merchants, financial institutions, strategic partners, businesses, and government entities. Additionally, it provides card products, platforms, and value-added services. The company offers its products and services under the Visa, Visa Electron, Interlink, VPAY, and PLUS brands. Buffett’s Berkshire Hathaway holds nearly 8.3 million shares of V.
On May 31, V partnered with Fundbox, an embedded working capital platform for small businesses, to strengthen Fundbox’s platform with new digital payment capabilities. Under this collaboration, Fundbox Flex Visa Debit Card will be launched, issued by Pathward, N.A.
In addition, the companies will work together in the coming months to introduce a range of new payment products, including a Buy Now, Pay Later (BNPL) solution, and a push-to-card transfer option for instant fund disbursement through Visa Direct. This partnership is expected to extend the company's customer reach and boost its revenues.
On March 10, V completed the acquisition of Tink, an open banking platform. With this transaction completion, it is expected to allow clients to deliver substantial benefits, including greater choice and quality of digital money services for consumers to control their financial experiences effectively.
V's net revenues increased 25.5% year-over-year to $7.19 billion in the fiscal second quarter ended March 31, 2022. The company’s non-GAAP net income and non-GAAP earnings per share came in at $3.84 billion and $1.79, registering an increase of 26.6% and 29.7% year-over-year, respectively. Also, net cash provided by operating activities grew 12.8% from the year-ago value to $7.72 billion.
The $7.06 billion consensus revenue estimate for its fiscal 2022 third quarter (ended June 2022) represents a 15.1% improvement from the same period in 2021. Analysts expect the company’s EPS for the to-be-reported quarter to come in at $1.74, representing a 17% increase year-over-year.
It’s no surprise that the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters. V's shares have gained 9.4% over the past month to close the last trading session at $213.66.
V's POWR Ratings reflect this promising outlook. It has an overall B grade, translating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
V has a grade of B for Sentiment, Growth, and Quality. Within the Consumer Financial Services industry, it is ranked #6 of 48 stocks. Click here to see V's additional POWR Ratings (Stability, Value, and Momentum).
Stock to Sell:
Snowflake Inc. (SNOW)
SNOW is a cloud-based data platform provider. The company’s platform offers Data Cloud that enables customers to consolidate data into a single source to drive business insights, share data and build a data-driven application. The platform is used by various organizations in a wide range of industries. Warren Buffett’s Berkshire holds just over 6.1 million shares of SNOW.
In the fiscal 2023 first quarter ended April 30, 2022, SNOW's total operating expenses increased 37.4% year-over-year to $463.21 million. The company’s operating loss came in at $188.77 million, while its loss before income taxes stood at $192.49 million. Its net loss and loss per share attributable to common stockholders amounted to $165.79 million and $0.53, respectively.
In addition, the company's cash outflows from investing activities and financing activities amounted to $189.79 million and $11.85 million, respectively.
Analysts expect SNOW’s earnings per share for the fiscal 2023 third quarter (ending October 2022) to come in at $0.03, representing a decrease of 3.1% from the same period in 2021. Also, the consensus EPS estimate of $0.06 for the fourth quarter (ending January 2023) indicates a 53.4% decline year-over-year.
The stock has declined 48.2% over the past six months and 55.9% year-to-date to close the last trading session at $146.46.
SNOW's POWR Ratings reflect its poor prospects. The stock has an overall rating of D, equating to a Sell in our proprietary rating system.
SNOW has a grade of F for Stability and D for Value, Momentum, and Quality. It is ranked #74 of 80 stocks in the Technology - Services industry. Click here to see SNOW's additional POWR Ratings (Growth and Sentiment).
V shares were trading at $213.40 per share on Wednesday morning, down $0.26 (-0.12%). Year-to-date, V has declined -1.18%, versus a -16.11% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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