Top Warren Buffett Picks to Invest In Instantaneously
Alright, let's dive into some of Warren Buffett's recent investment moves. Buffett's been piling up quite a bit of Sirius XM Holdings (SIRI 2.25%), now owning over a third of the satellite radio provider via Berkshire Hathaway (BRK.A 1.71%, BRK.B 1.80%).
Berkshire Hathaway has a diverse portfolio of quality companies, both wholly-owned and publicly traded. Among the latter, Sirius XM, Nu Holdings (NU 8.61%), and T-Mobile (TMUS -1.46%) are Buffett's top picks right now.
Sirius XM Holdings
Buffett's got a soft spot for Sirius XM, especially when it plays tunes that may not be everyone's cup of tea. Berkshire Hathaway initially invested through tracking shares, taking a small position in the common stock when it could. In late 2020, things got exciting as the tracking shares were converted into Sirius XM. Buffett could have cashed out, but he saw potential and decided to hold on.
Since then, he's been boosting his stake in Sirius XM three times, owning 35% of the company's outstanding shares. Despite Buffett's faith, however, the market hasn't been kind to Sirius XM, losing almost half its value over the past year.
This drop in share price has value investors scratching their heads, wondering if it's time to jump on the bandwagon. Sirius XM is trading for just 7 times forward earnings, churning out at least $1 billion in annual free cash flow, and sporting a dividend yield approaching 5%.
While growth might be elusive, the valuation is undeniably attractive. The declining subscriber count and increasing competition from digital streaming platforms are challenges, but the market opportunities are not lost on Buffett. After all, as offices reopen and gas prices remain affordable, the allure of Sirius XM as a digital broadcasting platform for in-car entertainment could make a comeback.
Nu Holdings
On the flip side, Nu Holdings (the parent company of Nubank) offers growth at a compelling price. Launched only 11 years ago, Nubank already has 58% of Brazil's adult population on its platform. Revenue soared 50% in its latest quarter, although a strong U.S. dollar dampened the growth to a mere 24% for U.S. investors.
Despite slowing growth, Nu remains profitable, with adjusted net income rising 54% for the quarter. The cost of servicing an account is under $1 a month, and monthly average revenue per account is over $10. Nu's expansion into Mexico and Colombia opens up new growth opportunities, but the platform can also sustain growth in Brazil by adding more services.
Nu is not as cheap as Sirius XM, but it's certainly affordably priced for its growth potential. The stock trades for just 19 times this year's earnings and less than 14 times next year's profit target.
T-Mobile
Buffett tends to gravitate towards the top dogs, but he's chosen T-Mobile as the wireless carrier that offers the best returns among the big three. T-Mobile's larger rivals have lower revenue and earnings multiples and larger dividend yields, but T-Mobile stands out for its superior growth and flexibility.
T-Mobile commands a greater market cap and enterprise value than its peers, with a modest 5% revenue growth forecasted for the next two years—twice as fast as Wall Street sees the larger players growing. T-Mobile's earnings growth, meanwhile, is projected to surge 10% this year and accelerate to 20% in 2026.
In conclusion, Buffett's investments in Sirius XM, Nu Holdings, and T-Mobile offer a mix of value and growth opportunities. As always, due diligence is advised before investing.
- Although Warren Buffett's faith in Sirius XM has led him to own 35% of the company's outstanding shares, the market has not been kind to it, with the share price dropping almost half over the past year.
- In contrast, Nu Holdings (the parent company of Nubank) offers growth at an attractive price, considering it has 58% of Brazil's adult population on its platform and its stock trades for less than 14 times next year's profit target.
- Buffett has chosen T-Mobile as the wireless carrier that offers the best returns among the big three, with its earnings growth projected to surge 10% this year and accelerate to 20% in 2026.
- Investing in Sirius XM, Nu Holdings, and T-Mobile, as per Buffett's recent moves, presents a mix of value and growth opportunities, but diligent research is always advisable before making any decisions.
