Oracles are supposed to be able to peer into the future. However, the Oracle of Omaha didn't seem to be very prescient in 2020. Warren Buffett's Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) badly underperformed the major market indexes last year.
However, Berkshire's portfolio still includes quite a few stocks that have tremendous growth prospects. Here are three Buffett stocks that should be surefire winners in 2021 (ranked by their relative size among Berkshire's holdings).
Image source: The Motley Fool.
1. Apple
Other than Berkshire Hathaway itself, Apple (AAPL 0.01%) is Warren Buffett's favorite stock. The tech giant was also one of Berkshire's biggest winners in 2020, with its shares soaring 81%. Apple's future continues to look bright.
There are several signs pointing to yet another blowout quarter when Apple reports its 2021 first-quarter results on Jan. 27. The company's suppliers are already posting tremendous revenue growth. App Store sales are at all-time highs. Demand for the new iPhone 12, particularly the iPhone 12 Pro, remains very strong.
Apple's prospects go beyond just one positive quarter, though. Its services business continues to soar and stands as a top long-term growth driver. As 5G wireless networks fully achieve their potential, the company's 5G-enabled iPhones will fly off the shelves even faster.
It's possible that there will be some major announcements from Apple later this year. Perhaps the most intriguing could be confirmation of rumors that the company will launch an iPhone with a foldable screen. The company could also unveil new services, perhaps including digital health services.
2. Mastercard
Few would have been surprised if Mastercard (MA 0.96%) had ranked among Buffett's losing positions last year. The coronavirus-fueled recession certainly weighed on the payment processing company's financials. However, Mastercard actually beat the S&P 500 index in 2020 with a 19% gain.
There's a simple reason why Mastercard performed well: Investors were looking ahead to a pandemic-free future. They didn't dwell on the company's revenue and earnings declines.
Mastercard should be a surefire winner as that future becomes a reality. Joe Biden's goal is to administer 100 million COVID-19 vaccine shots during the first 100 days of his presidency. If this plan succeeds, it should go a long way toward restoring Americans' confidence. That means consumer spending should rise, boosting Mastercard's fortunes.
Over the longer term, Mastercard is poised to profit from the unstoppable trend of the shift away from cash. While Buffett called bitcoin "rat poison squared," he just might make money from it. Mastercard stands out as a top cryptocurrency stock because of its partnership with BitPay for prepaid cards linked to cryptocurrencies, including bitcoin.
3. Pfizer
Pfizer (PFE 1.10%) is one of the few additions to Berkshire's portfolio in 2020. Although the big pharma stock didn't do much last year, it should be a much different story going forward.
The company will no doubt play an important role in the Biden administration's vaccination plan. Pfizer and its partner BioNTech market Comirnaty (BNT162b2), one of only two COVID-19 vaccines to have secured U.S. emergency use authorization so far.
Pfizer and BioNTech should be on track to split equally $14 billion or more in COVID-19 vaccine sales this year. By comparison, Pfizer will likely report close to $49 billion in total revenue for 2020. Comirnaty will, without question, serve as a significant growth driver for the big drugmaker.
There's even more good news, though. Pfizer spun off its Upjohn unit, which merged with Mylan to form Viatris. As a result, Pfizer's growth won't be held back by older drugs that are losing sales due to generic competition. The stock looks like a pretty good bet to be a winner for Warren Buffett in 2021.
