When it comes to building a winning stock portfolio, it’s often helpful to study the strategies of successful investors and incorporate them into your personal stock purchase plan. I often quote Warren Buffett’s wise advice in my articles and have a firm belief that investors of all trading styles and ages can learn from his long-term value-driven investing philosophy.
If you’re looking to add Buffett-approved stocks to your portfolio this month, you’ve come to the right place. Today we are going to take a look at two of the main stocks held by Buffett’s Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) that long-term investors should not hesitate to win now.
Let’s dive into it.
Cloud data storage company Snowflake (NYSE: SNOW) caused a stir when it debuted as a publicly traded entity last September. The company’s initial public offering (IPO) was priced at $ 120 per share, but in early December, the stock was trading at just under $ 400. The shares have notably retracted since then. The stock has been trading down around 8% year-to-date, although it should be noted that it is still up over 6% from its IPO around. 10 months.
A fundamental tenet of Buffett’s investment philosophy is to buy stocks of quality companies that are undervalued by the wider market and have strong competitive advantages to generate long-term, sustainable growth. . Snowflake’s volatility in recent months has put some investors off, but it’s important to remember that the stock price alone doesn’t tell if a stock is a quality buy.
Snowflake is a key player in the global data warehousing market. In fact, Snowflake controls a whopping 16.3% share of this rapidly growing industry. Allied Market Research reports that the data warehousing market reached a valuation of $ 21.2 billion in 2019 and is on track to reach a global valuation of over $ 51 billion by 2028.
Now, let’s take a look at Snowflake’s finances. The company closed its 2021 fiscal year on January 31. During the 12-month period, Snowflake reported product revenue up 120% to $ 553.8 million. It also generated an exceptional gross profit margin of 65% for the full year.
The company certainly didn’t disappoint when it released its financial results for the first quarter of its 2022 fiscal year on May 26. Over the three-month period, product revenue grew 110% year-over-year. In addition, it generated a gross profit margin of 66% for the products for the quarter.
It’s also worth noting that Snowflake’s net revenue retention rate – which indicates recurring revenue streams from existing customers over a two-year period – had climbed to 168% by the end of the quarter. The company closed the quarter with 4,532 customers, a peak of 67% from the previous year, and $ 1.4 billion in remaining performance obligations (customer orders to be fulfilled), an increase of 206 % year-on-year.
When a business is growing as fast as Snowflake, it is natural to wonder how it is doing in terms of liquidity. The good news is that the company closed the first quarter of its fiscal 2022 with approximately $ 645 million in cash and cash equivalents, $ 3.3 billion in short-term investments and total assets of 5.9. billions of dollars. In contrast, it has current liabilities of approximately $ 777 million, which are obligations due in the following year.
Meanwhile, the company is targeting between 88% and 92% year-over-year product revenue growth for the second quarter, while expecting its product revenue growth for the fiscal year 2022 is between 84% and 87%.
Even with the volatility of Snowflake’s stock price in recent months, analysts still believe the stock has upside potential of over 100%. The company is expected to continue to experience immediate growth difficulties as it expands its business and global footprint within the rapidly evolving data warehousing industry, but patient investors could reap serious benefits from this stock’s portfolio. with strong long-term growth.
2. Bristol Myers Squibb
When it comes to the pillars of healthcare stocks, few can compete with Bristol Myers Squibb‘s (NYSE: BMY) awards. The company has been in business since 1887 and is one of the largest pharmaceutical companies in the world.
Bristol Myers Squibb shares continued to rise slowly but steadily after the March 2020 stock market crash. The stock is trading around 15% higher than just a year ago and is up around 11% since the beginning of the year.
For the full year 2020, Bristol Myers recorded 63% revenue growth to a total of $ 42.5 billion. And in the first quarter of 2021, the company’s total revenue grew 3% year-over-year, with U.S. revenues alone surging 4%. It also reported a gross profit margin of 74.3% for the three-month period.
The company owes the sustained growth of its balance sheet to its broad range of best-selling biopharmaceuticals, which was bolstered by its acquisition of Celgene in November 2019 and its takeover of heart disease specialist MyoKardia in November 2020.
Cancer medicine Revlimid (acquired from Celgene), anticoagulant Eliquis, immunotherapy treatment Opdivo, psoriatic arthritis medicine Orencia, multiple myeloma treatment Pomalyst (acquired from Celgene), chemotherapy medicine Sprycel and the melanoma drug Yervoy were the main products that helped balance Bristol Myers leaf gains during the most recent quarter. Revlimid and Eliquis alone generated total revenue of approximately $ 2.9 billion each.
The company’s pipeline currently includes more than 50 compounds in development in more than three dozen therapeutic areas. Management expects high single-digit revenue growth for the full year, while analysts expect the company to deliver similar average annual profit growth for the next five years.
Investors should also be aware that blue-chip stocks pay a good dividend that pays just under 3% at the time of writing. (The average stock in the S&P 500 pays less than 2% dividend.) The company has a strong track record of increasing annual dividends. Last December, management announced a 9% increase in its quarterly dividend.
If you are looking for steady share price growth, a strong balance sheet fortified by an impressive lineup of blockbuster drugs and an attractive dividend, Bristol Myers Squibb is an obvious buy to add to your cart today and keep forever. .
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.