With market volatility on the rise, a great place to look for solid investments is Berkshire Hathaway's stock portfolio. Warren Buffett's ability to identify durable companies that can weather economic cycles has created tremendous wealth for Berkshire shareholders. Here are two elite growth stocks from its $271 billion stock portfolio that are no-brainer buys right now.
Amazon (NASDAQ: AMZN) has delivered monster returns for investors over the last few decades, but it took Berkshire Hathaway a while to get around to investing in the e-commerce giant. Berkshire bought its first shares in 2019 and still held 10 million shares at the end of 2024. The combination of strong competitive advantages and an attractive valuation makes the stock an attractive buy right now.
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While e-commerce fueled most of Amazon's growth over the last few decades, non-retail revenue coming from cloud computing, advertising, and third-party fulfillment services comprise most of the company's business. This is a good thing, because services generate higher profits and remain Amazon's fastest-growing segments.
Amazon Web Services (AWS) holds a more than 30% share of a growing $330 billion cloud market, according to Synergy Research. That makes AWS the leading cloud services provider, positioning Amazon to capitalize on the growing demand for artificial intelligence (AI). AWS revenue grew 18% in 2024 and now generates $107.6 billion in annual revenue, or 17% of Amazon's top line.
Amazon's growing AI capabilities will also continue to widen its competitive moat in online retail. There are over 600 million Alexa devices in customers' homes. This should prove incredibly valuable for Amazon's e-commerce business as AI makes it easier for millions of consumer to shop with the company.
Amazon is deeply entrenched in the lives of its retail customers and enterprise clients. The stock is currently trading at just 16 times its cash from operations on a per-share basis, which is the lowest level it has seen in over 10 years. This should lead to great returns as the business continues to grow.
Mastercard (NYSE: MA) is one of the most profitable companies around, and the stock has returned just under 500% over the last decade. At the end of last year, Berkshire held almost 4 million shares of this wide-moat business with substantial growth opportunities.
While credit card spending is dependent on a growing economy, the stock held up quite well during the market sell-off in 2022. And as fears of a recession have ramped up this year, investors should do well holding Mastercard in their portfolio.
The reason Mastercard can be fairly resistant to economic slowdowns is that it doesn't issue cards and carry credit risk like a bank. It simply processes card transactions and earns handsome profits doing so. This is a very high-margin business as there are only a few top credit card networks competing in the industry.
Last year, Mastercard processed $9.8 trillion of transactions. This left it with $28.2 billion in revenue, up 12% over 2023. It typically converts around half of revenue into profits with net income up 15% to $12.9 billion last year.
This business can grow for a long time. Despite Mastercard being accepted at 150 million locations globally, there are 1.5 trillion transactions still completed in cash and check every year. Mastercard will be chasing that opportunity for years, and that's great for investors.
Mastercard shares might look expensive trading at 37 times earnings, but that's a typical valuation for this elite growth stock. Wide-moat businesses with a long runway of growth are usually going to trade at a premium, as they should. Analysts expect its earnings to grow 14% annually in the coming years, which should sustain excellent returns for investors.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Berkshire Hathaway, and Mastercard. The Motley Fool has a disclosure policy.