For junior traders, emulating successful investors is often the most effective strategy. And who better to emulate than Warren Buffett, a stock market legend and Chairman of Berkshire Hathaway (NYSE: BRK.A), with decades of experience and a track record of numerous successful investments.
Buffett’s approach prioritizes fundamentals, focusing on a company’s performance, financial health, and future potential before making investment decisions. Years of experience have honed his ability to distinguish between good and bad investments and build a winning portfolio.
His portfolio comprises stocks from various industries, typically led by companies that outperform their competitors, offer dividends, and prioritize innovation. Two are obvious choices for traders, whether new to the game or seasoned veterans.
Picks for you
Visa (NYSE: V)
Visa (NYSE: V) dominates the credit card payment sector, commanding over 60% of the market share in the US and securing its position as the industry leader. Its extensive involvement across different financial industry sectors further bolsters its network with each expansion.
With decades of presence, Visa has earned trust and credibility among regulatory agencies, security analysts, merchants, and everyday consumers alike. This trust encourages merchants to readily accept payments on its networks.
With growth of over 4,000% since its IPO, V shares guarantee extended and constant returns in the future.
Mastercard (NYSE: MA)
Mastercard (NYSE: MA) is in second place, holding over 20% of the US credit card market share, and it has reaped substantial rewards from its dominant position in the duopoly market.
Both companies enjoy profit margins of around 50%, a notable increase from approximately 30% in 2010. This surge in profitability shouldn’t come as a shock.
Businesses leveraging network effects strengthen as they expand. Since these businesses operate with minimal assets, more significant expansion translates to higher profitability.
With more than 10,000% growth since its debut, MA stock is an easy pick for any prospecting long-term investment.
Both Visa and Mastercard are top-tier businesses with high price tags. Visa is currently trading at 31 times earnings, while Mastercard stands at 36 times earnings.
However, considering the S&P 500‘s overall valuation at 27 times earnings, this premium isn’t excessive for two of Buffett’s most lucrative stocks.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
