Warren Buffett is one of the world’s most renowned investors and is the CEO of the holding company Berkshire Hathaway (BRK.A) (BRK.B), which majorly owns shares of blue-chip companies with robust balance sheets and stable cash flows. Berkshire Hathaway's recently filed 13F showed that Buffett's collection of stocks grew in number during the first three months of 2022. Moreover, Berkshire's 13F revealed that the holding company spent $41.5 billion in net stock purchases in the first quarter, the highest since 2008.
Since the beginning of the year, the stock market has experienced wild swings as investors remain concerned about the Ukraine-Russia war, supply chain constraints, the Fed's potential interest rate hikes to curb the inflationary pressures, and a slowdown in economic growth. However, Buffett took advantage of the recent market dip to buy quality stocks.
Warren Buffett recently bought Celanese Corporation (CE), McKesson Corporation (MCK), and HP Inc. (HPQ). So, these stocks could be good additions to your portfolio as well.
Celanese Corporation (CE)
Headquartered in Irving, Texas, CE, a technology and specialty materials company, manufactures and sells high-performance engineered polymers internationally. The company operates through three segments: Engineered Materials; Acetate Tow; and Acetyl Chain. CE represents 0.4% of Buffett’s portfolio.
In February, CE announced the signing of a definitive agreement to acquire a majority1 of DuPont's Mobility & Materials ("M&M") business for $11.0 billion in cash. CE will acquire a wide portfolio of engineered thermoplastics and elastomers, industry-renowned brands and intellectual property, global production assets, and a world-class organization.
For the first quarter ending March 31, 2022, CE's net sales increased 41.2% year-over-year to $2.54 billion. Its operating profit grew 62.9% year-over-year to $531.00 million, while its net earnings improved 56% from its year-ago value to $504.00 million. The company's adjusted EPS rose 60.1% from its prior-year quarter to $5.54.
Analysts expect CE's revenue to increase 8.8% year-over-year to $2.39 billion for the second quarter ending June 2022. Moreover, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters. The company's shares have soared 11.9% over the past month.
CE's POWR Ratings reflect this promising outlook. The company has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has a B grade for Sentiment and Quality. Within the A-rated Chemicals industry, it is ranked #38 of 91 stocks. To see additional POWR Ratings for Value, Growth, Stability, and Momentum for CE, click here.
McKesson Corporation (MCK)
MCK offers healthcare services in the United States and internationally. It has four operating segments: U.S. Pharmaceutical, International, Medical-Surgical Solutions, and Prescription Technology Solutions (RxTS). MCK has a 0.3% weightage in Buffett’s portfolio.
MCK's revenue increased 11.8% year-over-year to $66.10 billion for the fourth quarter ending March 31, 2022. Its operating income amounted to $633.00 million, while its net income amounted to $368.00 million. The company's EPS came in at $2.47.
The $25.48 consensus EPS estimate for fiscal 2024 represents 9.4% year-over-year growth. Analysts expect revenue to increase 3.5% year-over-year to $64.87 billion for the first quarter ending June 2022. Moreover, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters. The company's shares have surged 35.3% year-to-date and 70.2% over the past nine months.
MCK's strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock also has a B grade for Growth, Value, and Stability. Within the Medical – Services industry, it is ranked #1 of 86 stocks.
In total, we rate MCK on eight different levels. Beyond what we've stated above, we have also given MCK grades for Sentiment, Momentum, and Quality. Get all the MCK’s ratings here.
HP Inc. (HPQ)
HPQ offers personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services worldwide. The company has three operational segments: Personal Systems; Printing; and Corporate Investments. HPQ represents 1.3% of Buffett’s portfolio.
For the first quarter ending January 31, 2022, HPQ's net revenue increased 8.8% year-over-year to $17.03 billion. Its earnings from operations increased 2.9% from its year-ago value to $1.36 billion, while its non-GAAP net earnings came in at $1.20 billion, up 1% from its prior-year quarter. The company's non-GAAP EPS rose 20% year-over-year to $1.10.
The consensus EPS estimate of $1.05 for the second quarter ending April 2022 represents 13% year-over-year growth. Analysts expect revenue to increase 2% year-over-year to $16.19 billion for the second quarter ending April 2022. In addition, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in all of the trailing four quarters. The stock has gained 14.3% over the past year and 26.4% over the past nine months.
It is no surprise that HPQ has an overall B rating, which equates to Buy in our POWR Ratings system. HPQ has a B grade for Quality and Value. Within the Technology – Hardware industry, it is ranked #11 of 44 stocks.
Click here to see the additional POWR Ratings for HPQ (Sentiment, Growth Stability, and Momentum).
CE shares were trading at $158.65 per share on Friday afternoon, up $2.90 (+1.86%). Year-to-date, CE has declined -4.71%, versus a -12.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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