When it comes to investing, Warren Buffett, the CEO of Berkshire Hathaway (NYSE: BRK-A)(NYSE: BRK-B), is in a class of his own. As an individual, he's grown a $10,000 seed investment in the 1950s into a net worth of $88 billion, as of this past weekend. Mind you, Buffett has also donated $37 billion of his Berkshire Hathaway stock to charity since 2006.
For Berkshire Hathaway investors, the Oracle of Omaha has created over $400 billion in value in over five decades. Between 1965 and 2019, Buffett's company averaged an annual return for shareholders of 20.3%, which equates to an aggregate return of 2,744,062%. Suffice it to say, Buffett has mopped the floor with the S&P 500.
Because of his overwhelming investing success, Wall Street and retail investors pay very close attention to what he's buying, selling, and holding. Considering that we're likely in a low-interest-rate environment for years to come, growth stocks continue to take precedence. Among the roughly 50 securities currently held in Buffett's portfolio, the following five are pegged by Wall Street to be the fastest growing in 2021.
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Snowflake: 89% estimated sales growth
Ironically, the fastest-growing Buffett stock in 2021 is a company that Buffett isn't responsible for adding to Berkshire Hathaway's portfolio. Cloud data warehousing company Snowflake (SNOW +1.16%) was added by one or both of Buffett's investment lieutenants, Todd Combs and Ted Weschler.
Snowflake brings a couple of unique features to the table for a cloud infrastructure company. It operates on a pay-as-you-go model, rather than a subscription-based model. Charging its clients based on the amount of data they store and Snowflake Compute Credits used makes expensing more transparent.
Furthermore, Snowflake's architecture is built atop many of the leading cloud infrastructure providers. Whereas it's very difficult for businesses to share cloud-stored data if they aren't using the same cloud infrastructure provider, Snowflake allows for seamless sharing since it's built above these barriers.
While its 89% projected sales growth will be impressive if it comes to fruition, Snowflake remains unprofitable and is valued at an exceptionally aggressive 76 times forecast 2021 revenue. This is one cloud stock that might be too pricey for its own good.
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StoneCo: 61% estimated sales growth
Fintech stock StoneCo (STNE +0.20%) is another hypergrowth company you'll find in Buffett's portfolio. Wall Street expects revenue to grow by 61% in 2021, pushing the company to north of $1 billion in annual sales.
StoneCo's claim to fame and long-lasting growth is the role it plays as a payment facilitator for small businesses in Brazil. Despite unprecedented challenges from the coronavirus, many small businesses in Brazil are up and running, and StoneCo's e-commerce solutions have stepped up in a big way.
In the third quarter alone, total payment volume traversing StoneCo's network jumped 114%, or nearly 48% if you remove coronavouchers (a form of assistance given to economically vulnerable Brazilians). The company's active client base also increased by a healthy 41% to 582,900.
StoneCo is still in the relatively early stages of its growth. It aims to develop a financial platform for small businesses, a fintech-as-a-service platform for small and large marketplaces, and a full-commerce platform that'll help merchants of all sizes digitize their business and expand their omnichannel presence.
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Liberty Latin America: 19% estimated sales growth
One of the more under-the-radar growth drivers in Berkshire Hathaway's portfolio in 2021 is Liberty Latin America (LILA +0.54%)(LILAK +0.00%). The Latin American-focused telecom and fiber optics company is expected to deliver 19% revenue growth in 2021, according to Wall Street's consensus.
Liberty Latin America's double-digit growth potential can be attributed to two catalysts. First, putting COVID-19 in the rearview mirror should make a big difference. Coronavirus lockdowns clobbered many of the company's most important operating segments, including mobile, where subscriber activity and roaming revenue have declined. Getting back to a sense of normalcy should allow fixed and mobile revenue to rebound.
Second, Liberty Latin America hasn't been shy about using acquisitions to drive growth. In the September-ended quarter, it completed the acquisition of AT&T's assets in Puerto Rico and the U.S. Virgin Islands for $1.95 billion in cash. Also, in late June, Liberty Latin America announced its intent to acquire Telefonica's Costa Rica operations in a $500 million cash-and-stock deal.
These deals, coupled with a COVID-19 bounce, put the company on track for solid top-line growth in 2021.
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Mastercard: 19% estimated sales growth
Speaking of the COVID-19 bounce, payment processing giant Mastercard (MA 0.15%) slides in as the fourth-fastest-growing Buffett stock for 2021.
Mastercard has the second-highest share of credit-card network payment volume in the U.S. -- the largest economy in the world, by gross domestic product. Assuming the coronavirus vaccination campaign is a success and businesses begin reopening, it's expected that consumers and enterprises will open the spending floodgates.
It's worth pointing out that Mastercard strictly acts as a payment processor and not a lender. Though some of its payment processing peers have chosen to lend, and are therefore able to generate interest income/fees during a booming economy, Mastercard has avoided lending. When inevitable economic contractions or recessions arise, Mastercard avoids any direct pain associated with rising credit delinquencies (as its peers are experiencing now). Playing it safe and sticking with high-margin processing is what keeps Mastercard's profit margin north of 40%.
With much of the world still using cash for transactions, Mastercard's growth runway remains bountiful.
Image source: Amazon.
Amazon: 18% estimated sales growth
Finally, a list of Buffett growth stocks wouldn't be complete without Amazon (AMZN 0.88%). Wall Street will be looking for the third-largest public company by market cap to deliver 18% top-line growth in 2021.
It's no secret that Amazon was a (pardon the pun) prime shopping choice during the pandemic. With folks staying home, more chose to order goods online. Amazon was already the go-to online marketplace prior to COVID-19. In 2021, according to eMarketer, it'll control nearly 40% of all online sales in the United States.
Being such a dominant force in online sales has helped Amazon lure in more than 150 million Prime members worldwide. The fees collected from Prime members help Amazon to undercut its competition on price, as well as ensure that customers remain within its ecosystem of products and services. It's been awhile since Amazon updated its Prime membership total, and it wouldn't be surprising if it were now well above 200 million.
Amazon also has its cloud infrastructure business, Amazon Web Services (AWS), which has consistently grown at a quicker pace than Amazon's marketplace. And its margins are substantially higher. As AWS grows into a larger percentage of total sales, Amazon's cash flow should explode.
