If investing were a sport, Warren Buffett would indisputably be in its hall of fame. Guiding the ship of Berkshire Hathaway (BRK.A 2.24%) (BRK.B 1.99%) for more than six decades, Buffett continuously writes a masterclass in spotting high-growth, high-value businesses. His strategic investments are well-documented, often used as a blueprint by eager investors worldwide.
And there is nothing wrong with walking down Wall Street in Buffett's perfectly placed footsteps. Why not learn from the best?
In this context, two holdings in Berkshire's portfolio stand out as robust investment opportunities right now. I'm looking at credit card processor Visa (V 0.39%) and mobile network operator T-Mobile US (TMUS 0.12%). These firms not only embody Buffett's investing strategy but also show potential for continued growth in the foreseeable future.
T-Mobile
Warren Buffett loves to invest in generous dividend stocks. Telecom stocks often offer tremendously high dividend yields. However, Berkshire's only direct investment in the telecom industry doesn't pay a dividend. Buffett liquidated his Verizon Communications (VZ -0.76%) position last year and closed out his AT&T (T -0.64%) stake in 2016, letting T-Mobile represent the future of wireless communications.
Berkshire picked up 5.2 million shares of T-Mobile in the fall of 2020 and spring of 2021. The stock has not skyrocketed from that point, currently trading almost exactly at Berkshire's reported average purchase price of $138.34. But Warren Buffett doesn't judge the success of his investments over a two-year span. His favorite holding period is "forever" and I think he's onto something with this T-Mobile investment.
In the first quarter of 2023, T-Mobile added 1.3 million net retail postpaid subscribers -- the committed kind with a long-term service subscription. In the same period, AT&T and Verizon also added 1.1 million net new subscribers in that lucrative category, combined.
The store is the same on a full-year level. Over the last four quarters, AT&T and Verizon increased their retail postpaid subscriber rolls by 4.6 million names. T-Mobile mustered 5.4 million new subscribers on its own.
So the company doesn't pay dividends. Instead, T-Mobile shares cash with its shareholders through a generous stock buyback program and reinvests the rest of its cash profits in growth-boosting infrastructure improvements. As a result, the self-styled Uncarrier's revenue and earnings growth hang out in the double-digit percentages while Ma Bell and Big Red tend to count single-digit increases as a victory.
The stock isn't even expensive after the sluggish action in recent years. You can pick up T-Mobile shares at the modest price of 14 times forward earnings projections or 2.1 times trailing sales. Topped off with Warren Buffett's value-oriented seal of approval, T-Mobile is the only American telecom I'd recommend nowadays.
Visa
This is a different story. Berkshire has owned Visa stock since 2013, adding and removing a few million shares over time. The stake is worth roughly $2.02 billion today.
Visa isn't Buffett's favorite credit card stock, trailing far behind Berkshire's $26.6 billion holdings in American Express (AXP 3.02%). However, I find Visa's forward-looking initiatives more promising than the more traditional financial services approach of American Express.
If you keep an eye on quarterly earnings calls and investor conferences, you'll often find Visa's management digging deep in next-generation opportunities. From blockchain-based payment processing to fraud detection powered by artificial intelligence (AI), Visa rides the leading edge of financial technology.
I can't say the same about American Express, whose leaders prefer to talk about bank regulations and slicing up its customer demographics in different ways. I'm sure that makes sense to an experienced banking genius like Warren Buffett, but it's just fiscal Gerrymandering to me.
So I'd rather invest in a payment services veteran with its proverbial eye on the digital ball. Visa has been leaning on AI tools since the 1990s, developing risk management and fraud detection system with deep learning and neural networks for decades.
All things considered, it looks like the generative AI boom and the rapidly evolving blockchain networks pose a game-changing threat to traditionalists like American Express. At the same time, they can actually become valuable tools in the hands of an open-minded competitor like Visa.