Investors can do a lot worse than keeping an eye on Warren Buffett's investing moves. You don't have to agree with all of the nearly four dozen stocks his company owns, but you should find a few appealing names in the portfolio.
Two names I like right now are Sirius XM Holdings (SIRI 0.14%) and Amazon (AMZN +4.41%). They are both part of the Berkshire Hathaway (BRK.A +0.06%) (BRK.B 0.20%) holdings. Let's go over why I think these are two stocks that even Berkshire Hathaway investors may want to consider buying even if it's with the next $1,000 you have to put to work in the market.
NASDAQ: SIRI
Key Data Points
1. Sirius XM Holdings
Berkshire Hathaway has been adding to its stake in the satellite radio provider over the past year and change. It now owns more than 37% of Sirius XM. One can argue that it hasn't been the smartest decision for Buffett's iconic conglomerate. That stock has tumbled 21% over the past year. Sirius XM did show some signs of life when it posted fresh financials last week, at least relatively speaking given the absolute flatlining performance.
Revenue declined less than 1% to $2.16 billion for the third-quarter results that Sirius XM announced on Thursday. Net income clocked in at $297 million -- or $0.84 a share -- reversing a huge goodwill hit showing a year earlier. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is a good way to cut through the accounting disparity on the bottom line, and it declined 2% to $676 million.
Tiny steps backward across key metrics may not seem applause worthy, but it's better than what the market was expecting. Analysts were forecasting a profit of only $0.78 a share on a 2% dip on the top line. After back-to-back quarters of falling short of Wall Street profit targets, Sirius XM came through with a beat -- and a raise.
Sirius XM boosted its revenue, adjusted EBITDA, and free-cash-flow projections for all of 2025 on Thursday, the three guidance metrics its updates every quarter. It now sees $8.525 billion on the top line, $2.625 in adjusted EBITDA, and free cash flow of roughly $1.225 billion.
The stock shot 10% higher on Thursday following the upbeat results. However, it gave back most of those upticks the following day despite the overall ascending market on Friday.
From a milestone standpoint, lapping last year's monster $3.36 billion non-cash goodwill impairment hit related to the conversion of its Liberty Media tracking shares during last year's Q3 does help clear the mud in the water. It's easier to see the value in Sirius XM as a value stock, now trading for just 7.7 times trailing earnings. The multiple drops to 6.9 if we look out to next year's rising bottom-line target.
Analysts see revenue marching in place for the next couple of years, but there are fates worse than top-line stagnancy. Satellite capital expenditures will decelerate sharply in each of the next three years, giving investors visibility into rising free cash flow that Sirius XM should continue to return to shareholders. With a current yield of 5%, annual hikes should continue the way they have since Sirius XM began declaring dividends in 2016. The share count that has been cut nearly in half over the past dozen years should keep contracting with continued stock buybacks.
NASDAQ: AMZN
Key Data Points
2. Amazon
Another Berkshire Hathaway holding with a strong positive reaction to earnings last week was Amazon. The leading online retailer also saw its shares jump 10% after posting quarterly results, in this case during Friday's trading session.
Net sales rose 13% to $180.2 billion for the three months ending in September. It may not seem like a lot, but after five quarters of top-line growth in the pre-teens, Amazon has come through with back-to-back periods of 13% year-over-year gains. An 11% increase in North American sales was lifted higher by a 14% uptick internationally and a 20% jump for its high-margin Amazon Web Services (AWS) cloud business. Adjusted operating income and net income clocked in with even stronger gains. Amazon has delivered bottom-line beats of 17% or better over the past year.
The better-than-expected showing comes at a critical time. Amazon shares have failed to keep up with most of the other "Magnificent Seven" components that are putting up market-thumping gains in 2025. Amazon shares were up less than 2% year to date before Friday's pop.
New Amazon investors are getting in at a fair price. Amazon is trading for 31 times forward earnings. It's a premium to the e-tailer's recent growth but a decent price for a company that historically trades at more generous markups given its dominant market position and history of coasting through Wall Street profit expectations.
