Looking for growth stocks in Warren Buffett's Berkshire Hathaway might seem optimistic, but you can't have a good growth stock without value, and you can't have a good value stock without growth. The latter applies here. Despite facing some cyclical challenges in 2023, UPS (UPS 0.03%), chemicals company Celanese (CE -1.12%), and Apple (AAPL -2.53%) all continue to improve their businesses for growth over the long term. Here's how.

UPS keeps transforming its business

The package delivery giant's sales and earnings are set to decline in 2023 due to the slowing global growth environment. Nonetheless, UPS is a company with excellent long-term growth prospects from its ongoing implementation of a transformational strategy. Launched in 2018, the strategy emphasizes growing its small and medium-sized (SMB) business and healthcare revenue, and taking a more selective approach to e-commerce deliveries. 

The pandemic helped accelerate growth in SMBs and healthcare as they hurried to develop e-commerce capabilities. Meanwhile, being more selective over e-commerce deliveries, such as foregoing certain less-profitable deliveries for Amazon.com, is helping improve profit margin and free cash flow from its assets in the U.S. and relieving stress on UPS' network. 

UPS Operating Margin (TTM) Chart

Data by YCharts

The emphasis on improving the quality of its revenue and improving revenue per piece over cost per piece has resulted in solid revenue and earnings growth even as volumes declined in the U.S. 

The next step in UPS' transformational journey is to carry on growing in its selected markets while increasingly utilizing technology to improve productivity. As such, UPS will emerge from the slowdown as a stronger company with better long-term earnings potential. Trading on 16 times estimated 2023 earnings (a year likely to be a trough year), UPS combines good value and growth for long-term investors.

Celanese will emerge stronger from a slowdown 

The chemicals industry tends to be cyclical. Given the tightness in supply and demand, all it takes is a slight drop-off in demand (usually caused by a slowing economy) to result in steep falls in prices. That's terrible news for chemical companies like Celanese. As such, Wall Street analysts have the company's earnings per share declining from $15.88 in 2022 to $12.12 in 2023. 

However, the 2023 estimate puts Celanese at just over 10 times earnings. Meanwhile, management continues to improve the underlying profitability of its business while waiting for the cycle to turn again. A few examples include finding better ways to use (or not use) its less productive plants, investing in low-cost production plants, and investing in digital technology to improve productivity. As you can see below, Celanese's profit margins tend to move up and down with revenue, but there's been a clear upward trend in its margins over the last decade. That stands the company in good stead for when the next upcycle begins.

Celanese margin performamce.

Data source: morningstar.com. 

Apple's margin expansion opportunity 

Representing nearly 40% of Berkshire Hathaway's publicly listed equities, it's fair to say the consumer electronics giant is a conviction holding. That's because it offers a combination of value and growth. It's value in the sense that it currently trades for less than 24 times its trailing-12-month free cash flow. That is not a bad valuation for a company in a down year caused by slowing consumer spending and a natural correction from the boom years of the pandemic.

It's a growth stock because its almost 28% share of global smartphone sales lags behind its more than 55% share in the U.S., so there's an opportunity to increase market share and participants in overall global growth. 

A customer holding up a smartphone.

Image source: Getty Images.

However, Apple's services revenue offers the best long-term growth driver for the company. Apple grew revenue at a 3% rate (on a constant currency basis) in the last quarter, but its services revenue grew much more (13% at constant currency and 6% reported). Given that Apple's services gross profit margin is roughly double that of products (71% versus 37% in its last quarter), if Apple can continue to expand services (iCloud, Apple Pay, Apple Music, etc.) then the margin expansion opportunity is significant. With double-digit growth in active devices in the quarter (now over 2 billion), Apple has plenty of potential to do just that.