Please ensure Javascript is enabled for purposes of website accessibility

3 Unstoppable Stocks That Are Beating Warren Buffett So Far This Year

By Keith Speights – Aug 8, 2021 at 6:02AM

Key Points

  • Warren Buffett's Berkshire Hathaway is delivering a solid return so far in 2021.
  • However, several stocks that Berkshire doesn't own are performing much better year to date.
  • Three of these stocks have strong growth prospects that should be attractive to Buffett.

Motley Fool Issues Rare “All In” Buy Alert

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

And the legendary investor doesn't own any of them.

Warren Buffett should be a happy camper. While his beloved Berkshire Hathaway's (BRK.A 0.93%) (BRK.B 1.10%) shares delivered an anemic performance in 2020, the stock is up 23% year to date. The Oracle of Omaha has returned to his market-beating ways.

But perhaps the legendary investor shouldn't be too happy. There are quite a few stocks that are easily outgaining Berkshire and aren't among the conglomerate's holdings. Here are three unstoppable stocks that are beating Buffett so far this year.

Warren Buffett with people in the background.

Image source: The Motley Fool.

Alphabet

Buffett admitted a couple of years ago that "we blew it" in not buying Google parent Alphabet (GOOG 6.30%) (GOOGL 6.09%). And yet Berkshire still doesn't own any shares of the tech giant.

That's a shame considering that Alphabet is absolutely killing it so far this year. The stock has soared 55% with no end to its momentum in sight.

Alphabet is the kind of unstoppable stock that Buffett should love. It has a fantastic moat. Other companies have tried to dethrone the Google search engine but failed. YouTube, Android, Chrome, and other top Alphabet products remain leaders in their respective markets.

The company also has strong growth prospects despite already boasting a market cap of $1.8 trillion. Potential growth drivers include Google Cloud, self-driving car unit Waymo, and artificial intelligence in general. If Buffett doesn't bite the bullet and buy Alphabet stock soon, I suspect he'll lament blowing it yet again within the next few years.

Microsoft

Buffett has said that he personally bought 100 shares of Microsoft (MSFT 6.16%) years ago after meeting Bill Gates. However, he later ruled out the idea of Berkshire buying the stock because his close friendship with the Microsoft co-founder might lead to the perception of a conflict of interest.

That has turned out to be a very expensive friendship through the years. It's still costing Buffett. Microsoft stock has jumped over 30% so far this year -- well ahead of Berkshire's gains.

Like Alphabet, Microsoft is a juggernaut. The company's Windows operating system continues to dominate. CEO Satya Nadella noted in Microsoft's fiscal 2021 fourth-quarter conference call last month that in the past three years, three units -- gaming, security, and LinkedIn -- have topped $10 billion in annual revenue.

Each of those businesses should continue to fuel Microsoft's growth. The company also has other great opportunities for growth with its cloud hosting unit and productivity apps such as Teams. With Bill Gates no longer active at Microsoft and Buffett stepping down from his role as a trustee with the Gates Foundation, Microsoft could be a good addition to Berkshire's portfolio.

Intuitive Surgical

As far as I know, Buffett has never mentioned the possibility of buying shares of Intuitive Surgical (ISRG 4.48%). Sure, the healthcare stock is priced at a premium. But Berkshire's purchases of shares of Snowflake and StoneCo, which trade at high sales multiples, show that Buffett isn't afraid of paying up in some cases.

Intuitive is yet another stock that's beat Berkshire year to date with its shares up close to 26%. And it's been able to do so even with lingering concerns about the prospects of elective surgical procedures being delayed due to COVID-19.

Although robotic surgery has been around for more than two decades (pioneered by Intuitive Surgical, by the way), the technology is really still only in its early innings. Aging populations across the world should drive higher demand for the types of surgeries that are ideally suited for robotic assistance.

Intuitive's innovations should help expand the types of procedures where robotic systems can be used as well. The company believes that around 20 million soft tissue surgeries are performed each year that could be a good fit for robotic assistance. Intuitive's systems were used in a little over 1.2 million procedures last year. 

Whether Buffett ever has Intuitive Surgical on his radar or not, this stock should be unstoppable over the long run. 

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Keith Speights owns shares of Alphabet (A shares), Berkshire Hathaway (B shares), Intuitive Surgical, and Microsoft. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Berkshire Hathaway (B shares), Intuitive Surgical, Microsoft, Snowflake Inc., and Stoneco LTD. The Motley Fool recommends the following options: long January 2022 $580 calls on Intuitive Surgical, long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2022 $600 calls on Intuitive Surgical, short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Nearly 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
349%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.