If you have ever wondered why Wall Street gives such close focus to a 90yo investor who believes in holding positions in top businesses for a long time, look at Warren Buffett’s record and you will see why.
Buffett has led his investment company to an average ROI of 20% after taking over the company in 1965.
As the summer continues, the following two Warren Buffett stocks are standing out as really great buys.
Amazon is top dog when it comes to online shopping. This year, the firm’s marketplace is anticipated to control around $0.40 of every $1 spent online in this country.
But what you might not understand about Amazon is that it is overwhelmingly dominant in its second industry, as well. Amazon Web Services (AWS for short) raked in 32% of global cloud spending in Q1.
Cloud infrastructure is still new and early in its expansion, and it is a much higher margin sector for Amazon when compared to retail. Thus, AWS will send Amazon’s cash flow to the moon as it expands into a greater percentage of total sales.
For the previous 11 years, investors have routinely valued Amazon with a multiple of up to 37 times its cash flow. If this stays intact, a tripling of its stock is a possibility by mid-decade.
Bristol Myers Squibb
Bristol Myers Squibb is a special company because of its organic growth possibility and astute dealmaking.
The company, along with Pfizer, co-developed the top oral anticoagulant, called Eliquis, which is on pace for over $10 billion in total sales this year. There is also cancer immunotherapy Opdivo, which is getting looked at in dozens of continuing clinical trials. Opdivo is already raking in around $7 billion yearly, and could go higher with more label expansion opportunities. With everything added up, eight therapies are in line for at least $1.2 billion in sales in 2021, based on extrapolated Q1 totals.
In a world where premiums are increases, it seems unjust that a firm so profitable might be valued at just 8.5 times Wall Street’s estimated earnings for next year.
Author: Scott Dowdy