A Green Zone Breakdown of Buffett's 3 Top Stocks

Here's what our system says about AAPL, BAC and AXP… Published By Money & Markets, LLC. February 29, 2024 Published By Money & Markets, LLC. February 29, 2024 [Turn Your Images On] [Turn Your Images On] From The Desk of [Matt Clark, CMSA®]( Chief Research Analyst, [Money & Markets Daily]( [A Green Zone Breakdown of Buffett's 3 Top Stocks]( Money & Markets Daily, I’ve spent the last few days poring over Warren Buffett’s latest annual letter to shareholders. If for no other reason than to gain insights from one of the foremost investing minds of our time. In Saturday's letter, Buffett discussed the sheer size of Berkshire Hathaway Inc. (NYSE: BRK.B), mentioning that the company's $894 billion market cap now occupies 6% of the total S&P 500 companies. By that accounting, Buffett noted, there are not many companies left in the market with the ability to “move the needle” at Berkshire. Buffett’s company needs to invest massive capital to see meaningful returns, and that means avoiding almost all stocks with smaller market caps. He’s not looking to acquire every company under the sun. This philosophy gives us smaller investors a clear advantage over Buffett and Berkshire Hathaway. He’s picked through everything, but we haven’t. Adam O’Dell’s proprietary Green Zone Power Ratings system helps you cut through the noise and find stocks that could move your needle… or ones to steer clear of. I thought it would be an interesting exercise to run Berkshire's top three holdings through the system and see what it tells us about Buffett’s investment decisions. While the Oracle of Omaha admits his company is kind of stuck looking for the right investment, you can be nimble and find stocks that are best suited for today's market. Buffett Holding No. 1: Apple Inc. By far, the largest position in the Berkshire portfolio is Apple Inc. (Nasdaq: AAPL). More than 50% of the portfolio is occupied by the technology giant — $174.3 billion, to be exact. And Adam's system points to a solid year ahead for AAPL. [Turn Your Images On] Apple stock rates 66 out of 100 on Adam’s Green Zone Power Ratings system. That means we are “Bullish” on the stock and expect it to outperform the broader market by 2X over the next 12 months. The stock’s overall rating is buoyed by its 96 on Quality. That is thanks to its strong returns on assets, equity and investment. Apple has a return on equity of 154.3%, compared to the communication equipment industry average of just 2.5%. Its 91 on Growth comes from a 15.8% jump in earnings per share quarter over quarter. Overall, AAPL is a strong stock with excellent quality and growth. --------------------------------------------------------------- [Turn Your Images On]( [Silicon Valley Billionaires Are Quietly Buying Into What We Call the “Imperium” Boom]( See why Bill Gates, Mark Zuckerberg and Peter Theil are making huge bets on this breakthrough now. [Details here.]( --------------------------------------------------------------- Buffett Holding No. 2: Bank of America Corp. The second-largest holding in Buffett’s portfolio is Bank of America Corp. (NYSE: BAC). This Charlotte-based global banking stalwart makes up 10% of Buffett’s overall portfolio — or $34.8 billion. And Adam's system points to a rough road ahead for America's second-largest bank. [Turn Your Images On] BAC stock scores 17 out of 100 on our system. That means we consider the stock “High Risk” and expect it to significantly underperform the broader market over the next 12 months. In addition to its 1 on Size, BAC is hit hard with its 17 on Quality. Its quality score comes in part from its operating margin of 16.7%, compared to its industry average of 27.4%. BAC’s remaining ratings are in line with the rest of the industry, meaning it neither over- or underperforms its peers. But if there's a top holding in the Berkshire portfolio that could drag its performance down over the next year, BAC fits the bill. Buffett Holding No. 3: American Express Co. Buffett’s third-largest holding in his portfolio is American Express Co. (NYSE: AXP). AXP makes up 8.2% of his total holdings — or $28.4 billion. And if Buffett is following Green Zone Power Ratings, he may want to up that position. [Turn Your Images On] At a 74 out of 100 on our system, AXP also rates as "Bullish." The stock’s 83 on Growth stands out due to a one-year annual sales growth rate of 21.1% and an earnings growth rate of 14%. AXP earns an 82 on our Momentum factor as the stock has jumped more than 24% in the last year. Its $157 billion market cap does make it one of the larger companies we rate (2 on Size) and its price-to ratios vary little from the specialty finance industry averages — earning it a “Neutral” 56 on Value. Bottom line: Whether you invest like Buffett or not, you can’t argue with his results. However, because Berkshire Hathaway is now so large, its pool of investment opportunities is considerably smaller than it was even just five years ago. You don't have to worry about being a smaller and nimbler investor. Your pool is as deep and wide as you want it to be. And Adam’s Green Zone Power Ratings system is the perfect tool to help you jump into the deep end and invest like a pro. Until next time… Safe trading, [Matt Clark, CMSA®]( Chief Research Analyst, [Money & Markets Daily]( --------------------------------------------------------------- [Turn Your Images On] The Data Pointing to a Banking Crisis Workplaces changed forever in 2020. Workers at many companies spend fewer days in the office. This is shown in the chart below. Kastle tracks real-time access to office buildings through app, keycard and fob usage in 2,600 buildings. Over 41,000 businesses are included in this data which covers 47 states. Four years after the pandemic shutdown the economy, barely 50% of office space is being used as the shift to hybrid work continues. That's a problem for banks which lent money to developers and management companies. Bottom line: Unless occupancy increases, many of those loans will sour in the years ahead. This looks like a crisis that will move slowly and unrelentingly towards a sudden collapse in parts of the financial sector. [Turn Your Images On] [(Click here to view larger image.)]( Check Out More From Money & Markets Daily: - [WE ALREADY KNOW NEXT MONTH’S WINNING SECTOR]( - [WILL AI REPLACE YOUR FINANCIAL ADVISOR?]( - [1 MOTTO TO LIVE BY IN THE HUNT FOR PROFITS]( --------------------------------------------------------------- [Turn Your Images On]( Privacy Policy The Money & Markets, P.O. Box 8378, Delray Beach, FL 33482. To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or [whitelist]( within your spam settings. For customer service questions or issues, please contact us for assistance. The mailbox associated with this email address is not monitored, so please do not reply. Your feedback is very important to us so if you would like to contact us with a question or comment, please click here: [( Legal Notice: This work is based on what we've learned as financial journalists. It may contain errors and you should not base investment decisions solely on what you read here. It's your money and your responsibility. Nothing herein should be considered personalized investment advice. Although our employees may answer general customer service questions, they are not licensed to address your particular investment situation. Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments carry large potential rewards but also large potential risk. Don't trade in these markets with money you can't afford to lose. Money & Markets permits editors of a publication to recommend a security to subscribers that they own themselves. However, in no circumstance may an editor sell a security before our subscribers have a fair opportunity to exit. Any exit after a buy recommendation is made and prior to issuing a sell notification is forbidden. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. (c) 2024 Money & Markets, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This Newsletter may only be used pursuant to the subscription agreement. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly prohibited without the express written permission of Money & Markets. P.O. Box 8378, Delray Beach, FL 33482. (TEL: 800-684-8471) Remove your email from this list: [Click here to Unsubscribe]( Privacy Policy The Money & Markets, P.O. Box 8378, Delray Beach, FL 33482. To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or [whitelist]( within your spam settings. For customer service questions or issues, please contact us for assistance. The mailbox associated with this email address is not monitored, so please do not reply. Your feedback is very important to us so if you would like to contact us with a question or comment, please click here: [( Legal Notice: This work is based on what we've learned as financial journalists. It may contain errors and you should not base investment decisions solely on what you read here. It's your money and your responsibility. Nothing herein should be considered personalized investment advice. Although our employees may answer general customer service questions, they are not licensed to address your particular investment situation. Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments carry large potential rewards but also large potential risk. Don't trade in these markets with money you can't afford to lose. Money & Markets permits editors of a publication to recommend a security to subscribers that they own themselves. However, in no circumstance may an editor sell a security before our subscribers have a fair opportunity to exit. Any exit after a buy recommendation is made and prior to issuing a sell notification is forbidden. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. (c) 2024 Money & Markets, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This Newsletter may only be used pursuant to the subscription agreement. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly prohibited without the express written permission of Money & Markets. P.O. Box 8378, Delray Beach, FL 33482. (TEL: 800-684-8471) Remove your email from this list: [Click here to Unsubscribe](