Warren Buffett is known as one of the world's greatest investors, having built a net worth of nearly $110 billion solely on the back of his investing prowess. Not surprisingly, investors in stock markets often try to emulate Buffett's investing strategy and buy stocks that belong in the portfolio of the legendary investor's company, Berkshire Hathaway (BRK.A -0.34%) (BRK.B -0.01%).
While I do not recommend you buy a stock just because Buffett does, some of his stocks certainly deserve your attention right now given their incredibly strong growth catalysts. Here are three such top Buffett stocks you'd want to consider buying without wasting any time.
The market is underappreciating the potential here
Visa (V 0.65%) critics got a big kick in the latter half of 2021 when e-commerce giant Amazon (AMZN 1.30%) said it'll ban payments using Visa cards on its platform starting Jan. 19, 2022 because of high transaction fees. The development scared investors, but I strongly believed the fears were overblown, as Visa was already negotiating with Amazon and was confident of putting an end to the feud.
Amazon has now reversed its decision to ban Visa payments and said it is in talks with Visa to find a solution. In other words, shareholders can put this worry aside, at least for now (although I don't expect Amazon to raise this concern again), and focus on Visa's operational performance and growth prospects instead.
Image source: Getty Images.
Things look encouraging on that front. For example, Visa's revenue increased 10% in the financial year ended Sept. 30, 2021. Visa's payments volume, on which it receives a cut, surged 18% in the year to $10.4 trillion. That's a huge number, and reflects the size and scale of Visa's operations. In fact, Visa's payments volume hit a record high in 2021, and the company grew its revenue and earnings per share by double-digit percentages. Visa also increased its dividend by 17% in 2021.
The emergence of the omicron coronavirus variant may have renewed fears of travel restrictions that could hit Visa's volumes, but there's no denying that global cross-border travel is still much higher now than where it was last year. At the same time, the pandemic has accelerated the pace of shift from cash to digital payments as more consumers now prefer to shop for products and services online and from the convenience of their homes.
It's the perfect growth setting for Visa's core business, even as it continues to innovate and expand its revenue streams. For example, Visa closed 2021 with a $925 million acquisition of CurrencyCloud to facilitate cross-border currency exchange.
Visa is on solid footing and could be headed for another strong year, making it a top Buffett stock for long-term investors to own.
This hot Buffett stock is acing the EV game
Among the handful of auto stocks that Buffett owns, one that I have my eyes on is BYD (BYDDY -2.62%). Not many know that this China-based company is one of the world's largest electric vehicle (EV) manufacturers. Within its home country, BYD is also one of the largest manufacturers of lithium-ion batteries and even owns a semiconductor business. It's a great stock to play the EV boom.
A couple of concerns have weighed on BYD shares recently, including tighter regulatory scrutiny on foreign stocks in the U.S. and their potential risk of delisting, and a steep cut in subsidies for EVs in China. BYD shareholders, however, needn't worry about either. BYD is already listed on the Hong Kong stock exchange, and is increasing prices to make up for the cut in subsidies. The price increase shouldn't hurt demand, as nearly every local EV maker in China is increasing prices as well and demand for BYD's EVs is incredibly strong.
For perspective, BYD's sales volumes of new energy vehicles (NEVs) in the month of December more than tripled to 93,945 units. BYD has a busy 2022 lined up, with plans including a couple of new launches such as its premium brand Denza in collaboration with Daimler, international expansion, and the public listing of its semiconductor arm. BYD expects to sell 1.1 million to 1.2 million units in 2022, which would mean 25% market share in China's NEV market. With NEV sales in China predicted to grow at double-digit compound annual rates in the coming years, BYD's journey to growth may have only just started, which is what makes this Buffett stock so compelling.
Just owning this stock could mean owning all Buffett stocks
If you're a Buffett fan and want to invest like him, there's one stock pick that beats all -- buy Berkshire Hathaway stock itself. You see, when you buy shares in Berkshire Hathaway, you not only indirectly become a shareholder in every publicly listed company Buffett is invested in -- such as the two companies discussed in this article -- but also gain exposure to all the businesses Berkshire Hathaway owns and operates. They include insurance, rail transportation, utilities, energy, and more. As an example, the conglomerate owns North America's largest freight railroad, BNSF.
As for its equity investments, Berkshire Hathaway owned more than 40 stocks as of Sept. 30, 2021, which is the latest quarter that it reported numbers for. From high-flying tech stocks to financial and industrial stocks, the conglomerate's portfolio owns stake in companies across sectors discuused here, such as Visa and BYD.
Growth in its businesses and a rise in the value of equity stocks it owns adds value to Berkshire Hathaway, and as its value rises, so should shareholder returns. Berkshire Hathaway is also flush with cash, having built a record cash pile of $149.2 billion as of Sept. 30, 2021 that it should be able to put to good use, including regular share repurchases as Buffett is a strong advocate of stock buybacks.
Combined, all of this adds up to make Berkshire Hathaway a solid Buffett stock. If you don't own it yet, now might be the time, given that Berkshire Hathaway's next quarterly report is around the corner.
