Since taking control of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) in 1965, company Chairman and CEO Warren Buffett has amassed an enviable portfolio of stocks, collectively worth more than $361 billion, as of this writing. Those who've invested along with Buffett -- either through owning Berkshire Hathaway shares or by mimicking his investing approach -- have made fortunes along the way.
That doesn't mean every investor should simply buy and hold every stock Warren Buffett owns through Berkshire today -- especially considering the vast majority of the enormous portfolio is focused on just four mega-cap stocks. Buffett himself has even said he'd invest very differently if he were managing significantly less money, specifically by focusing on small-cap stocks to drive outperformance.
Even so, that raises the question: Which Warren Buffett stocks are actually worth buying right now? I think the following two tech stocks stand out from the rest.
This cloud stock is flying high for a reason
Berkshire owns just under 6.13 million shares of Snowflake (SNOW 3.69%), worth around $1.13 billion as of this writing -- or roughly 0.3% of the entire portfolio. But don't let the small allocation fool you.
So named because snowflakes are "born in the cloud," Snowflake is the world's top cloud-based data warehousing company. Its Data Cloud platform is a global network that allows enterprise customers to unite their siloed data and execute a diverse (and growing) set of workloads. These range from data engineering to cybersecurity, data science, machine learning, and application development.
Snowflake's value proposition is evident if its latest better-than-expected quarterly results are any indication. Shares are up 30% over the past month after Snowflake announced that third-quarter revenue grew 32% year over year to $734.2 million, while its net revenue retention rate was an impressive 135%. This indicates that existing customers spend an average of 35% more on Snowflake's solutions after their first year.
Snowflake also saw a 52% increase in the number of customers (to 436) with trailing-12-month product revenue greater than $1 million. And the company is comfortably cash-flow positive -- a crucial advantage in today's market where capital is increasingly hard to raise -- generating free cash flow of $102 million during the quarter.
Sure, Snowflake is already a large-cap stock with a market cap of over $60 billion. But it still enjoys a long runway for growth as it works to capture a total addressable market (TAM) for its cloud data platform, estimated to be worth around $250 billion and growing.
A fintech stock trading below its IPO price
Buffett, through Berkshire, owns almost 10.7 million shares of Brazilian fintech company StoneCo (STNE 5.01%), worth $174 million today -- an even smaller portion of its enormous portfolio than Snowflake represents. But as it builds on its $5 billion market cap from here, StoneCo could eventually represent a far more significant chunk of Berkshire's holdings.
StoneCo is up more than 50% over the past month alone to just above $16 per share (but still trades far below its 2018 initial public offering price of $24 per share). This occurred after its latest quarterly report showed investors it's finally firing on all cylinders, once again.
More specifically, StoneCo just told investors it's on pace to achieve its first full-year profit after two straight years of losses. The company has benefited in recent quarters as its core base of micro-, small-, and medium-sized business (MSMB) clients in Brazil continue to flock to its platform -- even despite repricing initiatives StoneCo has implemented to offset higher expenses amid soaring interest rates and inflation in the country.
StoneCo is also in the process of gradually accelerating disbursements under its recently reintroduced credit product for small businesses. StoneCo previously had to shelve and redesign the product after technical glitches mired the launch of the Brazilian central bank's new financial registry system in 2021.
If that wasn't enough, StoneCo subsequently announced a new share-repurchase program worth 1 billion Brazilian reals (around $204 million) -- replacing a 300 million reals program it announced in October but already completed. It also gave longer-term guidance calling for compound annual growth rates (CAGRs) from 2024 to 2027 of 13% in MSMB total payment volumes, 26% for client deposits, 90% for its credit portfolio, and 31% for adjusted net income.
Zooming out to its broader opportunity, StoneCo is chasing an estimated TAM of over 100 billion reals (more than $20 billion) for payments, software, banking, and credit for MSMBs in Brazil. And that doesn't even include the company's plans to eventually expand into other Latin American countries such as Columbia, where management has noted "financial interest is just opening up" in a similar fashion as it has in Brazil in recent years.
