Warren Buffett is one of the most successful investors ever, with a net worth of $101.10 billion to prove it. He is currently the world’s sixth richest person, and the fourth richest man in the United States. Known as the “Oracle of Ohama,” Buffett’s investing strategy involves investing in fundamentally sound companies that are trading at cheap valuations. Also, Buffett believes in the “buy-and-hold” strategy, and has, on several occasions, advocated a long-term practical investment approach.
Class A shares of Buffet’s holding company, Berkshire Hathaway (BRK.A), are the most expensive stocks in the world, currently trading at $419,134 per share. In fact, Buffett recently “broke” the Nasdaq system when Berkshire Hathaway’s share prices crossed $421,200 last month.
Buffett’s investment portfolios have a record of delivering monumental returns and are tracked by analysts and investors worldwide. Shares of Moody’s Corporation (MCO) and DaVita Inc. (DVA) are two Berkshire Hathaway’s holdings. Given their fundamental strength, we think these stocks are poised to deliver robust returns over the long term.
Moody’s Corporation (MCO)
MCO is one of the biggest integrated risk management companies globally. It was named as a Fortune 500 company for the first time on June 2, owing to its stellar growth in the previous year. MCO operates through two segments–Moody’s Investors Service and Moody’s Analytics. Berkshire Hathaway is MCO’s largest shareholder, with a 13% stake in the company. Buffett holds 24.70 million shares of MCO.
On June 15, MCO added commercial mortgage-backed securities (CMBS) loan-level data to its commercial real estate solutions. This should give customers access to a comprehensive risk profile of real estate portfolios throughout the investment cycle.
Earlier, in March, MCO partnered with Team8 to invest $25 million in enterprise cybersecurity risk evaluator VisibleRisk. The collaboration should drive the development of a global standard for assessing corporate cyber risk.
MCO’s revenues increased 24% year-over-year to $1.60 billion in the fiscal first quarter ended March 31, 2021. Its net income increased 51.1% from its year-ago value to $736 million, while its EPS rose 51.8% from the same period last year to $3.90. Its free cash flow came in at $662 million, up 104.3% from the prior year quarter.
A $5.82 billion consensus revenue estimate for its fiscal year 2021 indicates an 8.4% improvement year-over-year. Analysts expect MCO’s EPS to come in at $11.41 in the current year, indicating a 12.4% rise from the same period last year. The company has an impressive earning surprise history; it beat the Street’s EPS estimates in three out of trailing four quarters. Shares of MCO have gained 25.8% year-to-date, and 2.6% over the past five days.
MCO has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
MCO has an A grade for Quality, and B for Sentiment and Stability. Of the 102 stocks in the Financial Services (Enterprise) industry, MCO is ranked #20.
Beyond what we have stated above, we have also rated MCO for Growth, Value, and Momentum. Get all MCO Ratings here.
DaVita Inc. (DVA)
DVA, a Denver, Colo., company, specializes in kidney dialysis services for chronic kidney failure or stage renal diseases. It facilitates both in-patient and out-patient dialysis services nationwide. As Buffett increased his holdings in the healthcare industry amid the pandemic, he invested heavily in DVA stock. Buffett’s Berkshire Hathaway held approximately 36.10 million shares of DVA as of March 31.
On June 2, DVA launched a virtual support group app DaVita Care Connect. With more than 50% of DVA home patients using online health platforms, this app is expected to be a big hit among the patient community. This demonstrates DVA’s innovative prowess and enhances customer satisfaction.
In May, DVA expanded its in-home kidney care program to offer its HomeChoice Claria Automated Peritoneal Dialysis system. On March 23, the company partnered with Fresenius Medical care North America to provide home hemodialysis machines and related supplies to patients across the United States. These moves should help DVA expand its market reach and customer base significantly. DVA has gained 57.6% over the past year to close Friday’s trading session at $121.67.
For its fiscal first quarter ended March 31, DVA’s dialysis patient services revenues increased slightly to $2.71 billion. Its EBT increased 2% from the same period last year to $376.76 million. And its net income and EPS from continuing operations increased 4.9% and 15.5%, respectively, from the prior year quarter to $291.55 million and $2.09.
The Street expects DVA’s revenues to rise slightly year-over-year to $11.58 billion in its fiscal year 2021. The company’s EPS is expected to rise 18.2% from the year-ago value to $8.58 in the current year. Furthermore, DVA beat consensus EPS estimates in three of the trailing four quarters.
It’s no surprise that DVA has an overall B rating, which equates to Buy in our proprietary rating system. The stock has a B grade for Stability, Quality, and Value. It is ranked #8 of 80 stocks in the Medical – Services industry.
In addition to the grades we’ve highlighted, one can view DVA’s ratings for Growth, Sentiment, and Momentum here.
Click here to checkout our Healthcare Sector Report for 2021
MCO shares were trading at $364.93 per share on Monday afternoon, down $0.06 (-0.02%). Year-to-date, MCO has gained 26.26%, versus a 14.68% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.
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