People often turn to respected investors like Warren Buffett when looking for stock advice. On the surface, following Buffett’s steps may make sense, as he has a track record of beating the market dating back to the 1960s.
Nevertheless, Buffett’s company, Berkshire Hathawayhas grown to a market cap of approximately $1 trillion, and companies of that size may have objectives that differ significantly from those of average investors.
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Fortunately, the Berkshire portfolio contains some growth stocks that are likely an excellent choice for average investors, even those with a $3,000 budget. Knowing that, they should take a closer look at these three.
Despite a market capitalization of $2.2 trillion, Amazon(NASDAQ: AMZN) remains well-positioned to drive outsized growth in both technology and retail.
On the technical side, Amazon Web Services (AWS) founded the cloud computing industry. And because the cloud is a critical part of running artificial intelligence (AI) workloads, Amazon has also become a leading AI company. With its leadership in these areas, most of its business revenue comes from AWS.
However, investors shouldn’t write off the e-commerce side of the business. Online sales volumes have decreased and the company’s financials do not affect the profitability of that particular company. Fortunately, the selling platform powers the fast-growing subscription, advertising, and third-party seller services.
These companies are likely to help the e-commerce-focused North American and international segments achieve operating profit. As a result, an improved financial picture led to net income of $39 billion in the first nine months of 2024, representing annual earnings growth of 98%.
And the stock has become attractive for one surprising reason: its valuation. The price-earnings ratio (P/E) of 44 exceeds the S&P500 averages. But this is low compared to the much higher profit figures of recent years, making it all the more attractive despite its enormous size.
NuBank parent company Now Holdings(NYSE: NOW) is not a household name in the US, but the world’s largest digital bank outside Asia continues to make waves in Latin America. In that part of the world, a small number of banking institutions dominated in each country, leaving a large portion of the population without a bank account or credit card.
NuBank has made efforts to change that situation. In Brazil, almost 21 million people received their first credit card through NuBank. And 99 million people, or 56% of Brazil’s adult population, are now customers.
The company has seen early success replicating this formula in Mexico and Colombia, which together account for 11 million of its customers. In total, the digital bank now serves 110 million customers, 21 million more than the year before.
Nu Holdings recently pulled out following news that Berkshire sold 20% of its stake in the company. However, fintech shares have tripled in the past two years, and with Buffett’s team retaining 80% of their position, the sale likely doesn’t represent a loss of confidence in the company.
Nu’s net income for the first nine months of 2024 was $1.4 billion, up 112% from the same period in 2023. Given this rapid increase, the relatively low price/earnings of 38 makes it an income that investors should have on their radar to have.
T-Mobile (NASDAQ:TMUS) continues to deliver high performance, especially compared to its older competitors, AT&T And Verizon Communications.
As one of only three nationwide 5G carriers in the U.S., it enjoys a competitive advantage because it is the only one starting out as a wireless carrier. This has allowed it to avoid most of the legacy costs of its peers, allowing the stock to consistently outperform peers and the S&P 500.
Admittedly, performance is starting to resemble that of a mature company. Revenue growth has fallen to single digits and it pays $3.52 per share as annual dividend, which equates to a 1.4% yield.
The telecom has won awards for having the highest 5G availability in the world, and its 127.5 million customer connections are a record high, with 1.6 million of those customers in the last quarter alone.
So for the first three quarters of 2024, net income was $8.4 billion, up 33% compared to the same period in 2023. Amid these rising profits, the price/earnings ratio stands at 28, a slight increase for the year but well below 2021 levels. Overall, performance and valuation should position the country for further gains as growth continues.
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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. Will Healy has positions in Berkshire Hathaway and Nu Holdings. The Motley Fool holds and recommends positions in Amazon and Berkshire Hathaway. The Motley Fool recommends Nu Holdings, T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.
The Best Warren Buffett Stocks to Buy Right Now with $3,000 was originally published by The Motley Fool
