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Potential Growth Stocks in Warren Buffett’s Portfolio
With the return of market volatility, investors are seeking opportunities within established portfolios. One of the most reliable sources for solid investment ideas is Warren Buffett‘s Berkshire Hathaway. At the close of 2024, the company reported a stock portfolio valued at $271 billion, containing several high-quality growth stocks selected by Buffett and his investment team, which includes Todd Combs and Ted Weschler.
Identifying Berkshire holdings that have the potential to double in value over the next five years can be advantageous for investors, as these stocks have already undergone rigorous evaluation by seasoned investors. Below are two Berkshire holdings that show promise for substantial growth by 2030.
Amazon’s Growth Trajectory
Amazon (NASDAQ: AMZN) has experienced remarkable growth, soaring 1,000% over the past decade and doubling its value within the last five years. Since acquiring the stock in early 2019, Berkshire Hathaway has retained 10 million shares as of the end of 2024.
Buffett and his team maintain a positive outlook for Amazon’s business trajectory. The company’s robust e-commerce segment generates consistent revenue, further enhanced by improved profit margins from other sectors. Analysts anticipate the potential for the share price to double within five years, driven by stable revenue growth and profit increases.
A significant contributor to Amazon’s success is its loyal base of Prime members who consistently turn to the platform for their essential needs. Efforts to streamline fulfillment costs have seen the company nearly double its net income to $59 billion in 2024. The adoption of robotics within fulfillment centers is expected to further reduce operational costs, thus maximizing profits.
Additionally, Amazon Web Services (AWS) stands out as a critical growth driver, having generated $107 billion in revenue last year. The division is expanding rapidly, driven by advancements geared towards artificial intelligence (AI) applications, positioning it favorably within the ever-evolving cloud market. Notably, AWS reported a 19% revenue growth year-over-year in the last quarter, contributing significantly to Amazon’s overall operating profit.
American Express’s Continued Expansion
American Express (NYSE: AXP) remains one of the cornerstone investments for Buffett, demonstrating impressive performance with its stock tripling in value over the previous five years. The company’s initiatives to attract new premium cardholders globally and its steady growth in existing markets suggest that Amex could double its stock value once more in the coming years.
Amex cardholders tend to exhibit strong spending patterns, illustrated by an 8% year-over-year increase in billed business during the fourth quarter. Management projects an ability to grow earnings at a mid-teens annual rate, justifying the potential for stock doubling within five years with reasonable spending growth from cardholders.
The company has successfully captured a growing demographic of millennials and Gen Z consumers, leading to a significant increase in new cardholder acquisitions—rising from 12.2 million in 2023 to 13 million in 2024. This trend has also resulted in greater margins, with net card fees up by 17% from the previous year.
Despite a fruitful year marked by double-digit revenue growth and adjustments in earnings per share, American Express management sees substantial room for international expansion, where their market penetration remains limited. The international card services segment experienced a 14% growth in billed transactions in 2024, indicating a significant area of opportunity.
Berkshire Hathaway’s long-term commitment to American Express, spanning over three decades, reflects confidence in its continued growth. Analysts forecast an annualized growth in adjusted earnings of around 15% in the long run, suggesting that substantial potential remains for this Berkshire favorite to double by 2030.
Investors considering Amazon or American Express may want to do thorough research before making a purchase, as various factors can influence market performance and stock valuation.
For additional investment insights and strategies, feel free to explore further market analyses.
2 Warren Buffett Stocks That Could Double by 2030 was originally published by The Motley Fool.
Source
finance.yahoo.com