You could have made a lot of money over the years by following Warren Buffett’s advice. choice of actionsHe invested early in many iconic companies, including American Express And Coca-Cola. But he’s also shown the ability to profit from already massive businesses, like his more recent investment in Apple.
What are Buffett’s best ideas right now? Three stocks in particular stand out.
This Could Be Buffett’s Next Superstar Title
Very often, companies that operate outside the United States go unnoticed, even if they are listed on American stock exchanges, run by American founders and backed by American investors. Currently in portfolio (NYSE: NOW) is a primary example.
This fintech company has a market capitalization of $60 billion and over 100 million users, but most Americans have never heard of it. That’s because it operates exclusively in Latin America, which has a population of over 650 million. If you want to invest in a company that has decades of growth ahead of it, Nu is the place to go.
The company was launched in 2013 after co-founder David Vélez, then a member of Sequoia Capital’s investment team, recognized a huge opportunity in Latin America’s banking sector. For years, the region’s banking sector had been dominated by a handful of powerful incumbents charging high fees to customers for simple services. Nu’s strategy was simple: bypass the existing financial system by offering low-cost financial services directly through a smartphone.
In 2014, the company had almost no customers. Today, it has more than 100 million, including more than half of Brazilian adults.
Sales continue to grow by double digits each year, and there is very little competition that could slow Nu’s progress. In recent years, it has entered the Colombian and Mexican markets, with hundreds of millions more Latin Americans remaining as potential customers.
According to Berkshire HathawayAccording to Buffett’s recent filings, Buffett’s holding company currently owns about 107 million shares worth about $1.3 billion. Buffett has owned the stock since the company went public in 2021. So far, he hasn’t sold any shares. Putting $10,000 to work by buying Nu stock is a fantastic way to follow this Buffett stock with Decades of growth in front.
Bet on these great companies
What should you do with your remaining $20,000? Consider splitting it evenly between Visa (NYSE: V) And MasterCard (NYSE: MA) stocks. Both of these companies have been among Buffett’s best investments this century, and it’s not hard to see why.
Visa and Mastercard are competitors, of course. But it’s not that simple. Together, these two companies control 86.5% of the U.S. credit and debit card market. Just two companies account for the rest of the market.
This extreme market consolidation makes sense. The payments industry relies on networks. Merchants must accept payment methods accepted by customers, and customers must pay with payment methods accepted by merchants. The result is a natural consolidation of the sector.
Visa and Mastercard are both considered “cap-light” companies because most of their businesses are software, which is infinitely scalable at very low cost. This typically translates into higher profit margins as the company grows.
This is exactly what we saw. Since 2010, Visa and Mastercard’s profit margins have fallen from around 30-35% to between 45-55%. In a nutshell, it’s a type of business that only gets stronger with time.
Probably the best option is to split an investment in two. This way, you will diversify your investment away from the stocks of a single company, instead banking on the natural dynamics of the sector over the long term. This is exactly what Buffett did. According to the latest filings, Berkshire Hathaway currently owns $2.3 billion in Visa stock and $1.9 billion in Mastercard stock.
Don’t have $30,000? No problem. Try starting with $3,000. Even $300 will be enough. The main goal should be to put your money to work in high-quality businesses like this. Then, as Buffett often does, you can increase your bets over time.
Should You Invest $1,000 in Nu Holdings Right Now?
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American Express is an advertising partner of The Ascent, a Motley Fool company. Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Mastercard, and Visa. The Motley Fool recommends Nu Holdings and recommends the following options: long January 2025 $370 call on Mastercard and short January 2025 $380 call on Mastercard. The Motley Fool has a position in the stocks mentioned and recommends Apple, Berkshire Hathaway, Mastercard, and Visa. The Motley Fool recommends Nu Holdings and recommends the following options: long January 2025 $370 call on Mastercard and short January 2025 $380 call on Mastercard. disclosure policy.
Best Warren Buffett Stocks to Buy With $30,000 Right Now was originally published by The Motley Fool
