'Tis the season for giving gifts. Nobody is better known for his near-infinite generosity on that front than the legendary Santa Claus. Based on a fourth-century monk who was famous for giving away his wealth, the modern iteration of Santa Claus is known for delivering gifts to children this time of year, often based on what those recipients ask for from their wish lists.
With that in mind, we asked three Motley Fool contributors what stocks they would hope Santa would be willing to deliver them as a special gift for the season. They picked Berkshire Hathaway (BRK.A 0.08%) (BRK.B 0.06%), Alphabet (GOOG -2.41%) (GOOGL -2.42%), and Amazon.com (AMZN -0.01%). Find out why, and decide for yourself whether any of them are stocks you'd also hope to own.
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A near-forever business is the gift that keeps on giving
Jason Hall (Berkshire Hathaway): 2023 will be remembered by most Berkshire Hathaway shareholders and followers as the year we lost Charlie Munger. Count me among those who think Munger's impact on Warren Buffett is probably underappreciated by the wider investing community. Suffice it to say that as a result of counseling Buffett to focus more on business quality than a cheap price, the foundation of the world's greatest conglomerate was laid. In the nearly six decades since, enormous wealth has been created for a lot of people.
And despite the tragic loss of the most influential lieutenant in corporate history -- ironically his loss is lessened by his actions and influence -- Berkshire is truly the corporate gift that keeps on giving. Buffett remains at the helm for now, but its subsidiaries have always been run by other, incredibly talented and dedicated managers. Warren still calls the biggest shots in the investing portfolio, but Ted Weschler and Todd Combs have spent more than a decade managing billions of dollars' worth of Berkshire's investments -- and according to Buffett, gotten better returns than he has.
Looking forward, there's plenty to like, too. Berkshire is very well-positioned to profit from higher interest rates. The company invests opportunistically with its massive insurance float, and its subsidiaries are cash cows that create plenty of extra capital for investment as well. Most of those subsidiaries should do well regardless of economic conditions. Trading for about 1.5 times book value, Berkshire isn't exactly cheap, but it's the sort of "own anytime" business that can serve as ballast during economic uncertainty, and still generate good returns when the bull is running.
I've been a good boy this year, Santa. I'll happily take a few "B" shares in my stocking this Christmas.
A tech titan is poised to grow ever mightier
Eric Volkman (Alphabet): I'd love for the Big Red Guy to deliver me a pack of Alphabet shares. It's one of the best tech titles out there, and even after years of dominance in its core activity, the company is poised for meaningful, shareholder-pleasing growth.
That core activity, it almost goes without saying by now, is internet search. Major competitors have tried -- nice effort, Microsoft -- but none has even come close to putting much of a dent in Alphabet's all-powerful search business.
In fact, its core operating unit has achieved the rare feat of becoming a commonly used verb in addition to a brand name. We don't ask someone to "perform a search on the internet," after all, rather we typically urge them to "Google it."
Search is a very lucrative activity for Alphabet, and it has a competitive moat that deters would-be rivals from entering the space. While it's not going to provide explosive growth, it offers the most stable foundation for a tech business imaginable.
It also produces vast amounts of capital for a host of other envelope-pushing ventures. One is the Google Cloud business, which continues to deliver double-digit growth rates in the face of determined competition from the likes of Amazon and, again, Microsoft.
A more exciting opportunity lies with artificial intelligence (AI), an area that Alphabet has plunged into with great zeal. Very recently it unveiled the cutting-edge generative AI model Gemini, which can work its magic on many different forms of content (not only text, but video, audio, and others). The Alphabet ecosystem is vast and wide, so Gemini has the potential to juice the company's business in a great many beneficial ways.
Alphabet richly deserves its long-standing tech-star status, but I think the company's best years are ahead of it. Its stock deserves to be under any investor's tree.
An innovative giant that rarely looks cheap
Chuck Saletta (Amazon.com): As a value-focused investor, I like buying shares in companies where I can see a clear return on investment in the form of dividends or strong profitability. While that philosophy has helped me sleep well at night despite the market's craziness over the past few years, it also means that I tend to miss out on some of the most innovative businesses around.
Amazon.com is one such company that I have long admired but not yet found a compelling price to buy it at. As a result, I'd love it if Santa would be willing to deliver me a few shares of its stock on his way through the neighborhood this evening.
Although it started out as an online bookstore, Amazon.com has morphed to become the "everything store." In addition to its direct retail operations, it now has a huge logistics business, is a leader in cloud computing, and is playing in artificial intelligence as well.
Of course, retail remains a rough, fairly low-margin business. Those other adjacent businesses Amazon.com has started as offshoots of that retail business have more attractive prospects, though. It's that innovation and willingness to push the boundaries in new areas that really makes Amazon.com valuable as a company.
I just wish its shares looked cheap enough for a value-focused investor like me to be willing to buy them. They trade at around 40 times expected earnings, though -- so a lot has to go right, for a long time to come, from the starting point of an already $1.5 trillion market cap, for today's price to look like a buy. If Santa were so kind to put a few shares under my tree tonight, though, I wouldn't turn down that gift.
Whether or not Santa delivers, it's good to know what to look for
Of course, Santa tends to prefer to deliver toys to children, not stocks to already financially savvy investors. Still, it's always good to have a wish list of stocks you'd like to buy or get more shares of. Every once in a while, the market will play its version of Santa Claus and offer up a deal on a company that's too good to pass up.
If you already know that it's a stock you'd like to own, it's much easier to buy while that deal is available than if you have to do all your research after the (likely short-term) sale has already started. So make today the day you put together a list of companies you'd ask Santa for. While they may not show up on their own, you just might find that making the list is exactly what you need to do to prepare yourself for when the market offers you the shares of great companies at gift-like prices.
