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3 Stocks Berkshire Loves (Even One They Sold)
11 Sep
Summary
- American Express offers a financial powerhouse model with dual revenue streams.
- Alphabet's Google Cloud shows impressive growth, taking market share rapidly.
- Ally Financial, despite a trimmed stake, remains attractive due to its banking model.
Berkshire Hathaway, a conglomerate with over 60 businesses, also manages a significant stock portfolio valued at over $300 billion. Among its holdings, three stocks stand out for their investment potential, including one that saw a reduction in the second quarter.
American Express (NYSE:AXP) is a long-standing, significant investment for Berkshire. Its unique model, acting as both lender and payment network, allows it to earn interest income and fees on every transaction. The company's affluent customer base is expected to provide resilience in potential consumer spending slowdowns.
Alphabet (NASDAQ:GOOGL, GOOG) is another major focus, with Berkshire increasing its stake aggressively. Both Google Services and Google Cloud are strong performers. Google Cloud, in particular, has demonstrated 82% revenue growth and a substantial backlog, indicating significant market share gains against larger competitors.
Berkshire trimmed its stake in Ally Financial (NYSE:ALLY) by approximately 7% in the second quarter, a move likely related to managing ownership below a 10% threshold for regulatory reasons, rather than a bearish outlook. Ally, a leading branchless bank and auto lender, is considered attractive in a rising interest rate environment, as its net interest margin can expand.
These three companies—American Express, Alphabet, and Ally Financial—each present unique investment profiles. Amex offers stability in the financial sector, Alphabet provides exposure to AI growth at a reasonable valuation, and Ally, despite economic sensitivities, shows compelling risk-reward dynamics for a leading lender.
