Winners win, and Warren Buffett is indisputably a winner. Shares of Berkshire Hathaway have delivered a staggering compounded annual gain of 19.8% between 1965 (when Buffett took over the company) and the end of 2023.
The legendary investor's winning ways have continued in 2024. Berkshire is again beating the overall market and is especially getting help from a select group of stocks. These three Buffett stocks are trouncing the S&P 500 so far this year.
1. Nu Holdings
Shares of Nu Holdings (NU 0.07%) have skyrocketed more than 40% year to date while the S&P 500 has risen around 12%. Although the fintech stock has see-sawed in recent months, it delivered explosive gains in the first quarter.
NYSE: NU
Key Data Points
Buffett's Berkshire Hathaway invested in Nu before its initial public offering in 2021, and the move seemed to have been ill-advised for a while as Nu's shares sank nearly 70% by mid-2022. However, the stock has been on a tear since the beginning of last year.
Nu operates one of the world's largest digital banks and serves around 100 million customers in Brazil, Colombia, and Mexico. It's especially dominant in Brazil, where its customer base includes 54% of the country's adult population.
2. DaVita
DaVita (DVA 3.43%) isn't too far behind Nu, with a sizzling return of 38% so far this year. Like Nu, DaVita achieved most of its gains in Q1. However, the stock has picked up momentum over the last few weeks.
NYSE: DVA
Key Data Points
You won't find DaVita listed among Berkshire Hathaway's subsidiaries. However, Buffett's conglomerate owns 41.2% of the dialysis services provider. That's a bigger stake than any other company in Berkshire's investment portfolio.
DaVita's earnings more than doubled year over year in the first quarter of 2024. However, this growth was largely due to the impact of the delayed payment of claims after a cyber attack on Change Healthcare, which is part of UnitedHealth Group's Optum unit.
3. Mitsui
Mitsui (MITSF 4.96%) (MITSY 4.58%) is one of five Japanese stocks in Berkshire's portfolio. It's the best performer of the group so far this year, as well as Buffett's third-best-performing stock overall, with a gain of 31%.
OTC: MITSF
Key Data Points
Buffett lavished praise on Mitsui (and the other four Japanese companies in which Berkshire has invested) in his latest letter to Berkshire Hathaway shareholders. He noted that these companies "follow shareholder-friendly policies that are much superior to those customarily practiced in the U.S."
Importantly, Buffett listed Mitsui as one of only eight stocks he expects Berkshire to own "indefinitely." Berkshire currently owns an 8.3% stake in the Japanese conglomerate, but he and his team agreed not to increase its holdings above 9.9%.
Are these Buffett stocks still good picks?
I wouldn't count on any of these high-flying Buffett stocks delivering similar returns in the second half of 2024. However, all three still appear to be good picks for some investors.
Growth investors might find Nu appealing. The digital bank should have solid long-term growth prospects as it offers more financial services to underserved customers in Latin America.
Value investors should like Mitsui. The Japanese stock trades at a trailing-12-month price-to-earnings ratio of less than 10.7. Mitsui also pays a forward dividend yield of 1.3%.
DaVita probably won't deliver the growth that Nu will. It's not as attractively valued as Mitsui with its forward earnings multiple of 15.8 and doesn't pay a dividend, but its business is relatively steady. It's also expanding internationally via four acquisitions that will make it the largest dialysis services provider in Latin America.
