Warren Buffett’s Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B) did not do well in 2020. When a stock hands over a gain of a measly 2% while the S&P 500 index gives 16%, it was a terrible year for that investment.
But this year could be different for Berkshire’s holdings. In fact, here are a few Buffet stocks that could make the legendary investor smile this year.
1. Apple
Apple (NASDAQ:AAPL) is possibly Buffett’s favorite stock, behind only Berkshire itself. But unlike Berkshire, this technology goliath was red hot in 2020 with its shares increasing by nearly 81%. And don’t think that Apple’s growth will vanish this year.
Wedbush analyst Daniel Ives believes Apple could skyrocket up to a $200 per share value. That’s an increase of more than 50%. I’m not sure if the stock will keep that jaw-dropping level in 2021, but there are many reasons to be bullish about Apple.
Maybe the most important reason to be hopeful is Apple’s iPhone sales. Newsmagazine said in December that Apple wants to increase its iPhone production by around 30% in the first part of 2021. This could lead to Apple’s quarterly sales in the second part of 2021 being very strong.
Also, Apple’s other products and services continue to have solid momentum. The company released high-end AirPods Max headphones that look to be destined to become another huge success.
Apple’s value might seem steep at more than 30 times expected earnings. But don’t think that will stop the tech giant’s prospects in 2021.
2. Mastercard
Mastercard (NYSE:MA) did better than the major market indexes in 2020 with an increase of almost 20%. I expect this year to be another market-beating year for the payment giant.
The pandemic hit many industries hard, with the travel industry especially hit hard. That was not good news for Mastercard. And the company’s Q3 results showed it, with both earnings and revenue missing analysts’ estimates.
I see Mastercard as a great pandemic rebound play. As vaccines become more widely available, the world could finally get a leg up on the pandemic. That should kickstart an economic recovery and give a big boost to Mastercard’s business.
One other reason why I’m hopeful about Mastercard. The company’s leaders approved a $6 billion buyback program this past December. So Mastercard will be fighting to repurchase its own shares in 2021, which should increase its stock price. Warren Buffett has been a fan of Mastercard for a while. But he might adore it in 2021.
3. Bristol Myers Squibb
Buffett bought a lot of pharma stocks in the third quarter of 2020. Several of them could do very well this year. I’m especially hopeful of Bristol Myers Squibb (NYSE:BMY).
BMS is very cheap right now. Its shares are trading at a very low eight times expected earnings. But don’t let that cheap valuation scare you. It does not reflect on the company’s growth prospects at all.
BMS could soon win approvals for its new blockbuster cancer immunotherapy Opdivo. Meanwhile, Zeposia, its treatment for multiple sclerosis has already won regulatory approval and has a great shot at winning more approvals for treatment of ulcerative colitis. Also there is Inrebic, which seems to be inches away from securing European approval for treating myelofibrosis. The company’s cancer cell therapies ide-cel and liso-cel could also win approval in the U.S. this year.
While BMS awaits these huge events, its current lineup continues to impress with healthy sales for blood cancer drugs Pomalyst and Revlimid, cancer immunotherapy Yervoy and blood thinner Eliquis. For all these reasons, I think BMS could be a big winner in 2021.
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