Three Berkshire Hathaway Investments You Should Take a Closer Look At!
New York, New York – May 25th, 2016 – Berkshire Hathaway has averaged a 19.7% annual growth in book value to shareholders over the last 49 years, which is more than double the S&P 500’s return, including dividends, over the same period.
As of May 25th, Berkshire Hathaway Inc. (NYSE: BRK.A) shares have gained approximately 10.0 percent year-to-date, outpacing the Dow Jones Industrial Average’s and the S&P 500 Index’s gains of 2.5 percent and 2.3 percent, respectively. Berkshire Hathaway reported profits were $5.59 billion for the first quarter of 2016, an increase of 8.3 percent when compared to $5.16 billion a year ago. Strong gains by the conglomerate’s manufacturing units and investment portfolio offset slumps from the insurance unit and railroads.
On May 16th, shares of Apple Inc. spiked 3.71 percent to close at $93.88 a share after it was disclosed Warren Buffett’s Berkshire Hathaway has taken a stake worth approximately $1.0 billion in the tech giant. The stock has since risen to $99.62 a share at the close of trading on May 25th. The conglomerate purchased 9.81 million shares of Apple at an average price of about $109 a share, according to a recent regulatory filing.
According to Market Watch, Apple’s returns on invested capital (ROIC) was 27.5 percent for its fiscal second quarter, which ranked it 13th “among the 228 companies in the S&P 1500’s technology sector”. At the close of trading on Friday, May 13th, Apple shares were trading at 10.9 times consensus earnings estimates for 2016, which was down from 14.4 times a year ago.“Apple at the current valuation makes a ton of sense; it’s a consumer-product company more than a tech company,” stated Jeffrey Matthews, author of “Warren Buffet’s Successor: Who It Is and Why It Matters”. “The company has a great financial model, a great brand name and a cheap stock.”
Let’s take a closer look at three other stocks that could benefit from an increased investment from Berkshire Hathaway.
Berkshire boosted its holdings in Visa Inc. (NYSE: V) by 3.6 percent, while lowering its stake in its competitor MasterCard by 5.6 percent. Shares of Visa have gained approximately 8.0 percent in the past three months and are up 2.0 percent year-to-date. Visa reported revenue growth of 6.0 percent year-over-year for the second quarter of fiscal 2016. The company has also continued to show worldwide growth in the most recent quarter as payments increased by 12.0 percent year-over-year. Additionally, Visa is prepared to apply for a domestic license to issue cards in China within the coming months. The company has already begun forming partnerships with Chinese institutions.
Berkshire also boosted its holdings in Bank of New York Mellon Corp. (NYSE:BK) by 3.6 percent. Shares of Bank of New York Mellon have gained approximately 20.0 percent in the past three months and are up roughly 2.0 percent year-to-date. Bank of New York Mellon reported earnings were $0.73 per share for the first quarter of 2016, an increase of 9.0 percent year-over-year and above consensus estimates of $0.67. Bank of New York Mellon currently offers investors an annual dividend of $0.68 for a dividend yield of roughly 1.63 percent.
Shares of Phillips 66 (NYSE: PSX) have gained approximately 2.0 percent in the past three months and are down roughly 2.0 percent year-to-date. Berkshire Hathaway purchased over 14 million additional shares of Phillips 66, bringing its total stake to about 75.6 million shares. Phillips 66 reported revenues were $17.8 billion for the first quarter of 2016, which was down from $23.4 million a year ago, but above Zacks Consensus Estimate of $16.9 billion. Phillips 66 currently offers investors an annual dividend of $2.24 for a dividend yield of roughly 2.81 percent.