During Berkshire Hathaway‘s (NYSE: BRK.A) (NYSE: BRK.B) Annual Meeting last weekend, CEO Warren Buffett made the following statement:
Equities have a huge advantage and … if you invest in America and maintain 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 in Berkshire in 1965, it has generated compound annual profits of more than 20%, and by the end of 2019 it had increased in value by a massive 2,744,062%. Given his track record, investors could do a lot worse than following the example of Oracle of Omaha.
In times like these, it should be a high priority to make sure your emergency fund is peaked. But if you have done so and still have some free cash left that you do not expect to need in the next three to five years ̵
If there is an industry that is not good when it comes to periods of financial uncertainty, it is probably payment processing. Even with consumers covering their expenses to get through the tough times, they still have important purchases to make, and no company is better positioned to take advantage of those expenses visa (NYSE: V).
The payment manager accounted for 53% of the US credit card purchase volume, which amounted to nearly $ 2 trillion in payments processed in 2018 – dwarfing the three largest competitors combined. Perhaps more importantly, unlike several of its primary competitors, Show does not borrow money. It represents a huge advantage at a time when unemployment clocks in at a staggering 14.7% and the risk of credit and bankruptcy continues to be higher.
Finally, the company still has a long way to go for growth in the future, especially in international markets. Visa estimates that people around the world still buy about $ 21 trillion in cash purchases each year, and there are nearly 2 billion consumers without payment accounts, giving the company a large and potentially lucrative market opportunity to leverage growth.
It does not deny it Apple (NASDAQ: AAPL) were severely affected by the COVID-19 pandemic. During the financial second quarter, which ended March 28, the company grew revenue gains of just 1% year over year thanks to strength from its services and segments that can be sustained. But iPhone sales – the single largest contributor to Apple’s top line – fell by 7%. To put it in context, revenue for the first quarter increased by 9%, while iPhone sales jumped 8%.
But all is not lost to Apple. In a somewhat cautious step, it recently introduced a lower cost iPhone SE, a move it had been planning for some time. With a starting price of just $ 399, the unit should appeal to budget-conscious smartphone buyers who might otherwise have been waiting to upgrade.
Then there’s Apple’s service segment, where revenue grew 17% year-on-year to a record of all time last quarter, despite coronavirus headwinds – or maybe backed by them. The success was broad-based with record sales from the App Store, Apple Music, video and cloud services as well as across most countries. It is obvious that the segment received an increase in consumers under orders at home.
The portable, home and accessories segment also had a record quarter with revenue up 23% year-over-year, driven by strong demand for AirPods and Apple Watch.
This stock still sells at a discount to its pre-coronavirus levels, but when investors realize that Apple is not a company on the brink, that sale won’t last long.
While Amazon (NASDAQ: AMZN) may not mark all the boxes in the typical Buffett stock, the legendary investor’s view of it is well documented.
Amazon has “surpassed everything I could have dreamed of could have done. Because if I really felt it could have been done, I would have bought it,” Buffett said back in 2018. “I had no idea it had the potential. the.”
It’s also worth noting that it was not Buffett who finally took the trigger to put it in Berkshire’s portfolio, but one of his subordinates, probably Todd Combs or Ted Weschler.
After falling as the pandemic began to affect its effects in the United States, Amazon shares recovered these losses and continued to rise, holding much better than most stocks since mid-February. Year to date, it has now increased by about 29%, while S&P 500 is still down by about 9%. Amazon services, from e-commerce to streaming video, and from cloud computing to Twitch, have become indispensable for both consumers and businesses during the pandemic.
The tech titan reported its first-quarter revenue last week, and the results were remarkable. Net sales rose 26% to almost $ 76 billion and the company generated $ 4 billion in operating profit, despite coronavirus-related headwinds. Amazon has a bold vision to adapt to these exceptional circumstances and plans to spend $ 4 billion over the next quarter to reduce the risk that their employees will cooperate with COVID-19 on the job or expose customers to it. News of the massive outlay initially sent the stock down, but it’s classic Amazon to look far into the future.
E-commerce represented only 11% of total retail sales in the US and the trend continues to increase. The new customers and new spending that Amazon has acquired during the pandemic will still remain long after the crisis subsided, with even more to come.