Warren Buffett is best known for his investing prowess, and the numbers prove why. The Oracle of Omaha's Berkshire Hathaway (BRK.A -0.46%) (BRK.B -0.29%) has clocked compound annual growth of 20% between 1965 and 2020, doubling S&P 500 returns over the same period, and that trend has continued into 2021.
Berkshire Hathaway currently owns nearly 45 stocks, most of which are established companies that have already proved their mettle over the years. But if you're considering buying some Buffett stocks right now, here are three you might want to consider buying right away.
These Buffett auto stocks offer a lot of promise
Buffett's Berkshire Hathaway owns shares of two auto stocks, General Motors (GM 5.15%) and BYD (BYDDY -2.10%), and I'm going to pound the table on both stocks today and ask you to pay them serious attention for one common reason: The electric vehicle (EV) boom. While BYD is already creating waves in the world's largest EV market, General Motors is diving into the EV space to ensure it isn't left behind in the hot race.
BYD, an acronym for Build Your Dreams, is already one of the world's largest EV manufacturers, specializing in electric commercial vehicles, particularly buses. That's not all -- BYD is also one of the largest lithium-ion battery manufacturers in China.
Image source: Getty Images.
Investors are often wary of Chinese stocks, but BYD already has a strong presence in the U.S. with tangible numbers to prove the commercial viability of its business that should put to rest most of investors' concerns. For example, BYD builds electric buses out of a plant in Lancaster, California, to serve its customers in the U.S., including the Los Angeles Department of Transportation, the Kansas City International Airport, and the Antelope Valley Transit Authority.
BYD dominated the list of the best-selling new energy vehicles (NEV) in China over the first nine months of 2021, with five BYD vehicles featuring in the top 15. BYD sold a record number of 80,003 NEVs in the month of October, up 263% year over year. Between January and October, BYD's NEV sales had surged 226%, driven by sales of plug-in hybrids and all-electric vehicles.
BYD's flagship electric sedan Han is a hot seller, and demand is so high for its hybrid models that the company currently has an order of 200,000 units of DM-i platform hybrid models with a wait time of several months, according to Chinese NEV news portal CnEvPost.
BYD already sells in Europe, is expanding aggressively into the Latin American market, and is seeing huge demand for its lithium batteries. I earlier picked BYD as one of the most underrated EV stocks yet, and I reiterate that opinion today for this Buffett-backed company.
Image source: General Motors.
General Motors, on the other hand, is silently setting itself up to make a splash in the U.S. EV market. In June, GM upped its targeted investments in electric and autonomous vehicles to $35 billion between 2020 and 2035, up a whopping 75% from its initially planned spending announced in March 2020.
GM projects its EV revenue to grow from an estimated $10 billion in 2023 to nearly $90 billion annually by 2030, driven by a series of EV launches, including 30 models across all brands that'll run on its own battery system called Ultium, by just 2025. GM is already investing heavily in building an EV charging network and developing an advanced driver-assistance technology to be offered starting in 2023.
Importantly, GM also owns an autonomous ride-sharing company, Cruise, that is not only equipping third-party fleets with driverless technology but also eventually building an autonomous vehicle called Origin. GM foresees Cruise to potentially generate $50 billion in revenue by 2030.
Both EVs and autonomous driving have huge potential, and GM's plans look impressive. GM also just bought stake in the electric boat-maker Pure Watercraft. With GM also investing heavily in converting its U.S. plants to 100% renewable energy facilities by 2025 and targeting doubling of total revenues by 2030, I'd expect Buffett to own GM shares for as long as he can, and you might want to as well.
Buy this dip without hesitation
Visa (V 0.54%) shares have been beaten hard this year, but such times also offer investors a golden opportunity to buy a stock that Buffett has long believed in.
One reason why Visa has fallen out of favor with investors in recent days is an ongoing spat with Amazon.com (AMZN 1.17%), with the e-commerce behemoth announcing its intention to ban payments made using Visa cards in the U.K. starting next year because of high fees.
Visa is already negotiating with Amazon to resolve the tiff, and there's still time for Visa to capture holiday sales on Amazon U.K. before the ban takes place, if at all. More importantly, although I believe the two companies are likely to find a middle ground, Visa may not have much to lose even if it were to be banned permanently on Amazon U.K., given that this arm of the e-commerce company is estimated to account for only a tiny fraction of Visa's revenues currently.
Visa, meanwhile, continues to grow its earnings, margins, and cash flows, return larger parts of cash flows to shareholders, expand its global footprint, and innovate as evidenced by recent investments in blockchain, open banking, and cloud connectivity. Visa's revenue grew 10% in the fiscal year ended Sept. 30, 2021, backed by nearly 18% growth in its payments volumes, and it now sees 2022 revenue growing at the "high-end of mid-teens."
That's anything but bad. And with Visa also increasing its dividend by 17% last fiscal year but the stock plunging in recent months, Visa is not only a no-brainer Buffett stock to own, but also one of the finest Dow stocks you could buy right now.
