The Best Warren Buffett Stocks to Buy With $300 Right Now
Warren Buffett and his team at Berkshire Hathaway have made themselves famous for the investing they've done over multiple decades. As a result, they've acquired quite the following among investors interested in the stocks Berkshire owns.
While the performance of Berkshire's portfolio is enviable on the whole, not every Buffett stock is going to be a good buy right now (for various reasons) for an investor with $300. But there are several that remain worthy of consideration. if you have $300 available that isn't needed to pay monthly bills, reduce short-term debt, or bolster an emergency fund, these three Berkshire-owned stocks may be worth a closer look. All three trade for less than $300 a share.
1. Amazon
Most people are aware of Amazon's (NASDAQ: AMZN) e-commerce site because that is where the company got its start more than two decades ago. But what many may not know is that Amazon has transitioned its business over time into a service-based model. Thanks to the rise of various segments, such as third-party seller services, advertising services, and its Amazon Web Services (AWS) cloud computing division, Amazon actually generates more revenue from its various service divisions than its commerce ones.
This change helped Amazon boost its profits, as service businesses tend to be far more profitable than retail.
With its margins rising, Amazon's profit growth has been on the rise over the past decade (excluding the anomalous pandemic year). With Amazon's profits and margins steadily increasing alongside solid sales growth, its stock is slated to rise even more.
2. Visa
Visa (NYSE: V) business operations are the most mature of this trio, and this shows in its earnings results. The multinational payment card services giant grew revenue by just 9% year over year in the first quarter of fiscal year 2024 (ending Dec. 31, 2023), but it increased its EPS by 20%. Visa did this by shrinking its operating expenses and decreasing its share count through buybacks.
Combining these two factors plus revenue growth provides a similar effect to what Amazon is experiencing. Visa is able to continually grow its earnings at a fast pace, priming its stock to beat the market.
Visa stock is also undervalued, at least from a historical perspective.
The stock trades at 28 times forward earnings, which is below its historical average and well below its trailing P/E near 34. Should Visa achieve analyst projections for earnings and rise to a trailing earnings valuation of 34 in one year, its stock would increase by 18% -- an excellent return for a mature stock like Visa.
3. Snowflake
Some investors may be surprised that Berkshire owns a stake in a high-growth company like Snowflake (NYSE: SNOW). But Buffett isn't the only one making investing choices using Berkshire's money. Todd Combs, another executive within Berkshire, is known to make more growth-style investments and is likely behind the Snowflake investment. But because Berkshire bought Snowflake shares pre-IPO and at an extreme valuation, Combs likely needed some approval from Buffett. Regardless, Snowflake is still a top stock to buy.
Snowflake is a cloud-based data storage and analytics service that is vital in today's world where data drives decisions and feeds real-time models. With the high demand for data caused by an artificial intelligence (AI) arms race, Snowflake is well positioned to benefit long term.
Like several tech stocks over the past five years, Snowflake saw its valuation elevate in 2021 and then plummet in the market correction of 2022. The stock is slowly returning to its previous highs and hopes to get a boost in that effort with the recent addition of a new CEO as Sridhar Ramaswamy takes the reins (he formerly led Google's advertising business).
Snowflake stock is now priced at 18.3 times sales -- nearly the cheapest it has ever been as a public company. With revenue growing 33% year over year in its latest quarter, now might a great time to take a position in the company.
While it may not be Buffett's favorite stock in his portfolio, it's primed to be a long-term winner.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet, Amazon, Snowflake, and Visa. The Motley Fool has positions in and recommends Alphabet, Amazon, Snowflake, and Visa. The Motley Fool has a disclosure policy.
The Best Warren Buffett Stocks to Buy With $300 Right Now was originally published by The Motley Fool
