At the end of the year, the balance sheets are made and 2022 is about to be archived as a year to forget for Wall Street too. The Dow Jones fell 10%, the S&P 500 plummeted by 20%, while the Nasdaq left on the ground as much as 33%. Everyone is now looking to 2023, despite a thousand uncertainties: the interest rate chapter remains open and the Fed's still hawkish stance. The latest inflation figure stood at 7,1% in November, down on at June's peak of 9,1%, but still high.
Instead of looking into the crystal ball or relying on the astrologer to see what could happen next year, some suggestions can come from Warren Buffett, considered the winning investor par excellence, with his Berkshire Hathaway, which ended 2021 with $276,1 billion in revenue. Its performances are, shall we say, respectable: from May 1996 to today it has gained approximately 1.730%. During the same period, the Dow Jones gained only, so to speak, 550%.
Buffett has always liked to buy lows and could go on the attack in 2023
Analysts Motley Fool they tried to do some simulation, according to Milano Finanza, and they concluded that in 2023 Buffett will go on the attack, given that historically the holding company of the US economist has obtained the best performances during bear markets. Based on some of Buffett's criteria for buying a stock, here are two names which would fit nicely into Berkshire's portfolio, according to Motley Fool pundits.
Titles in the sights: Williams-Sonoma, excellent evaluation
Buffett is a known fan of the titles of big brands so that Coke and Apple are two of Berkshire's largest holdings. There Californian Williams-Sonoma is a consumer goods retail company that sells tableware and home furnishings. Founded in 1956, it now owns a vast home furnishings empire that includes Pottery Barn and West Elm. The company has also evolved with the times, gaining a strong position in the e-commerce sector, as around 70% of its revenue now comes from the digital channel. The last financial results of Williams-Sonoma, they add to Motley Fool, offer another indicator of its economic advantage. The company has, in fact, registered a operating margin of 15,5%, outperforming most of its peers and continued to grow in a challenging environment for furniture stocks, with comparable sales up 8,1% for the quarter.
La Berkshire, analysts recall, already owns shares in RH, the former Restoration Hardware, another high-end furniture title that offers a similar value proposition to Williams-Sonoma. Finally, even the stock price could attract the attention of a value investor like Buffett. Currently, the price-to-earnings ratio is just 7, and the company has been aggressively buying back shares, reducing outstanding shares by 11% over the past year. Also pay a dividend yield by 2,7%. “With its brand strength, large operating margins and strong valuation, Williams-Sonoma would fit nicely into Berkshire's portfolio in 2023,” Motley Fool analysts indicate.
Titles in the sights: Walt Disney, the immortal giant with a simple business
Walt Disney has an unrivaled library of Intellectual Property ranging from classic Disney animation to Marvel and Star Wars and the Disney brand has stood for quality entertainment for families for nearly a century. The company has a business model that allows it to leverage this intellectual property in movies, television shows, live entertainment, theme park attractions, and consumer products such as toys. Buffett tends to prefer simple business models and Disney it may have gotten a little tricky, they warn the Motley Fool. It's in the midst of transitioning from a linear TV business to a streaming one, which adds some risk, but Berkshire already has a competitor. Paramount Global, the parent company of Paramount+, CBS and several cable networks. Berkshire began buying Paramount stock in the first quarter. Some observers have speculated that Berkshire bought Paramount because it expects it to be acquired by a larger media company, but it could also see some opportunities in the streaming industry.
Disney: Buffet likes intelligent leadership of Bob Iger
Furthermore, Buffett places great value on one intelligent leadership and with the return of Bob Iger on the CEO chair, it's hard to think that Disney can't fit into Buffett's portfolio. Iger has long been one of Hollywood's most respected leaders and reinvented Disney during his previous stint managing the company from 2005 to 2020, spearheading the acquisitions of Pixar, Star Wars, Marvel and 21st Century Fox, as well as launching the Disney+ streaming service.
Il Disney title it recently fell to a 52-week low, though the company said streaming losses will begin to narrow after hitting $4 billion in the just-ended fiscal year. The company has increased the prices of its streaming services, which should help it meet its goal of break-even profits by fiscal 2024. Meanwhile, theme parks they continue to bill well and the rest of the business should generate solid margins in a solid economy. Disney stock offers a unique combination of low price, broad economic base, attractive growth opportunities in streaming, and intelligent leadership, all qualities Buffett seeks.
How Buffett moved in the first part of 2022
in first three quarters of 2022 la Berkshire Hathaway of Warren Buffett bought 19 stocks.
They range from surprise choices like Taiwan Semiconductor, to the upstream oil producer Occidental Petroleum, which has become a favorite stock of the Omaha oracle, as Buffett is called.
69% of the holding's portfolio mid 2022 consisted of the first five titles namely Apple, Bank of America, Coca-Cola, Chevron and American Express, according to the so-called 13F document, the form that, according to US law, institutional investors who manage more than 100 million dollars must submit, reporting the shareholdings of the companies, as well as the size and market value of their positions.
All projects end of June Buffett's company had purchased 3,9 million shares of Apple Lossless Audio CODEC (ALAC),, for a value of 125 billion, so that the iPhone company represented 40% of the Berkshire Hathaway portfolio. According to the document, the billionaire's holding also bought 22 million shares in the second quarter Occidental Petroleum and 2,3 million shares of Chevron, reaffirming its faith in US oil. Beyond the oil sector, Buffett has increased his stakes in the bank holding company Ally Financial and in the media conglomerate Paramount Global.
It's not just acquisitions for Berkshire Hathaway. As stated in the document, in the second quarter, the company closed its position in Verizon Communications and Royalty Pharma and reduced its stake in General Motors, Us Bancorp e Kroger.
