Warren Buffett is arguably the greatest investor of all time. Also known as the Oracle of Omaha, Buffett has an enviable track record of identifying quality stocks that beat the broader markets across market cycles.
Buffett’s company, Berkshire Hathaway, owns several stocks in multiple sectors that are positioned to deliver inflation-beating returns. Here are three stocks Warren Buffett owns that should be on your shopping list, too.
Image source: The Motley Fool
VeriSign stock
Valued at US$18 billion by market cap, VeriSign (NASDAQ:VRSN)provides domain name registry services and internet infrastructure, enabling internet navigation for global enterprises. Down 28% from all-time highs, VeriSign stock has returned 268% to shareholders in the past decade.
VeriSign reported revenue of US$380 million in the fourth quarter (Q4) of 2023, up 3% year over year. Its operating income stood at US$256 million in the December quarter, higher than US$245 million in the year-ago period.
The tech company ended Q4 with 172.7 million .com and .net domain name registrations in the domain name base, indicating a yearly decline of 1.2 million registrations. In Q4, VeriSign processed nine million new domain name registrations, down from 9.7 million in the prior year quarter.
Analysts tracking VRSN expect adjusted earnings at US$7.92 per share, indicating a year-over-year improvement of almost 10%. Priced at 25.8 times forward earnings, VRSN stock trades at a discount of 23% to consensus price target estimates.
Mastercard stock
Valued at a market cap of US$429 billion, Mastercard (NYSE:MA) is among the largest fintech companies in the world. Mastercard is a payments processing company that has returned over 500% to shareholders in the past decade, easily outpacing the broader markets.
Today, there are close to three billion Mastercard-powered cards in circulation that are accepted at millions of merchant locations globally, allowing the company to benefit from powerful network effects and a wide competitive moat. Moreover, Mastercard’s widening profit margins have allowed it to expand earnings at an annual rate of 15% annually in the last five years.
Analysts expect its earnings growth to accelerate to almost 20% in the next five years, making it one of the fastest-growing stocks on the S&P 500 index.
Despite its outsized gains, Mastercard stock is priced at a 10% discount, given consensus price target estimates.
Nu Holdings stock
The final Warren Buffett stock on my list is Nu Holdings (NYSE:NU), which has already returned 135% in the last 12 months. Nu Holdings is a Brazil-based company that has gained massive traction in multiple Latin American markets.
Nu is a digital bank with a widening presence in Brazil, Mexico, and Colombia. It ended 2023 with 93.9 million members, an increase of 19 million year over year. This stellar growth in the user base allowed Nu to report revenue of US$8 billion in Q4 of 2023, up 62% compared to the same period in 2022.
Unlike several other fintech companies, Nu reports consistent profits. In Q4, its net income more than tripled to US$360 million, indicating a margin of 23%. Priced at 26.7 times forward earnings, Nu Holdings stock is really cheap and is positioned to deliver market-beating returns in 2024 and beyond.
