Warren Buffett's famous portfolio holds dozens of compelling stocks. It doesn't mean that you should buy them all just to follow in his footsteps.
Some of the names I like right now are Nu (NYSE: NU), Floor & Decor(NYSE: FND), and Sirius XM(NASDAQ: SIRI). They're not among the largest names in Berkshire Hathaway's stock portfolio, but there are some interesting catalysts for your consideration.
1. Nu
Buffett is no stranger to financial services, but some may be surprised to find that one of his most successful investments over the past year is a Latin American fintech stock. Nu is the parent company of Nubank, a fast-growing alternative to traditional banking in Brazil, Mexico, and Colombia. It reported mixed fourth-quarter results after Thursday's market close.
Revenue rose 57% to $2.4 billion on a foreign exchange-neutral basis, well ahead of the 53% increase that analysts were expecting. The platform's popularity is booming. There are now 93.9 million accounts, a 26% increase over the past year. Revenue is growing more than twice as fast as its user base because of the stickiness of the platform. Average revenue per active customer has climbed 23% over the past year. With costs to service accounts holding steady, the bottom line is booming.
Image source: Getty Images.
Nu posted its sixth consecutive quarterly profit. There's been sequential improvement on the bottom line for eight straight reports. The stock isn't cheap by Buffett's valuation standards. It closed Thursday at what is now 49 times trailing reported earnings.
However, the stock was cheaper before it soared 154% since the start of last year. It began last year trading for less than 20 times the profit it would eventually deliver that year. This year could be another case of a fast-growing company looking expensive at the beginning of the year but a bargain in retrospect.
2. Floor & Decor
Another Berkshire Hathaway stock making waves after reporting fresh financials after Thursday's market close is Floor & Decor. It's not easy being a multichannel specialty retailer and commercial flooring distributor these days. The residential housing market is still not fluid and the process to get employees back into in-office work has been slow.
Demand isn't there for flooring solutions, but on Wall Street it's all about expectations. Net sales for the fourth quarter were flat with the $1.05 billion it rang up a year earlier. It doesn't mean that business is steady. A 9.4% decrease in comparable-store sales was masked by Floor & Decor growing its store count. There are now 221 warehouses. Earnings per share were nearly cut in half to $0.34 a share.
It's a rough report but analysts were bracing for net income of just $0.26 a share on just $1.01 billion in sales. It's a beat on both ends of the income statement. This obviously doesn't make Floor & Decor a very attractive business right now, but it's just a matter of time. It may take some time before the rate cuts start to materialize this year, but it's going to be a feast for the real estate resale market. A lot of people are waiting for mortgage rates to fall to the point where it makes sense to move on from the homes they're sick of and find new places to stay. Floor & Decor -- larger and smarter -- will be there to cash in on the recovery in the home makeover market.
3. Sirius XM
Another business model waiting for its moment to shine is Sirius XM. The satellite radio provider had a rough 2023. It was the first year of declining revenue for the satellite radio provider in its 21-year history. Yes, even in 2020, when folks were barely using their cars, Sirius XM managed to grow its business. Guidance calls for another top-line dip in 2024.
The appeal to Sirius XM is along the same line as Floor & Decor. As more people return to workday commutes the value of a Sirius XM subscription will increase given the boost in usage. Its 2.3% dividend yield isn't much, but it's more than enough to collect while you wait out the recovery.
Should you invest $1,000 in Nu right now?
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Rick Munarriz has positions in Nu. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Nu. The Motley Fool has a disclosure policy.
