Again in 2024, Warren Buffett's Berkshire Hathaway is outperforming the market. Berkshire Hathaway owns 50 stocks and several enterprises. Buffett's judgments and expertise can help investors beat the market. Visa (NYSE: V), Nu Holdings (NYSE: NU), and Floor & Decor (NYSE: FND) are nice Buffett stocks to buy with $300 after paying off debts and saving for an emergency fund.
1. Visa has little credit card network competition. Buffett loves Visa's long-term competitive edge, which has carved out a large credit card processing sector. It processes over 4.3 billion cards and $15 trillion in trailing 12-month transactions, making it the world's largest credit card processing network.
Just as essential, it's always updating. It has a broad economic moat, but competition might replace it if it slacks. Visa veteran Ryan McInerney took over as CEO last year, following the company's strategy of building solid partnerships and developing new technology to stay competitive.
Visa is a top forever stock because it dominates the global economy and grows with it. Visa thrives when customers have money to spend, taking a small percentage every time a cardholder swipes. Visa has grown despite economic uncertainty, but the opposite is also true. The rebound from pandemic-related reductions is shown by rising cross-border volume. In the 2024 fiscal first quarter (ending Dec. 31), revenue jumped 9% to $8.6 billion and EPS rose 20% to $2.39.
Visa had an unparalleled 57% profit margin in the first quarter, turning over half of every dollar of revenue into profit. A constantly rising dividend is also paid. Visa has outperformed the market for years and should continue to do so.
2. Nu Holdings Digital bank Nu Holdings is one of Berkshire Hathaway's few growth stocks. It's a cash-rich financial corporation, typical Buffett stock. But it's growing fast and gaining market share in Brazil, Mexico, and Colombia.
Revenue rose 57% in the 2023 fourth quarter, and 4.8 million new accounts brought the total to 94 million. more accounts boost revenue, and Nu upsells and cross-sells more items to turn lower-paying consumers into highly engaged users that spend more time and money on its platform. ARPAC increased sequentially from $8.20 last year to $10.60 this quarter.
This perpetuates profitability. Nu wasn't profitable under GAAP when it went public in 2021, but it has already posted six straight quarters of net income, rising from $58 million in the 2022 fourth quarter to $361 million last quarter.
Nu succeeds despite regional economic issues due to its outstanding credit risk management. Brazil's economy is more volatile than the U.S.'s, with inflation and interest rates above 10%. In the fourth quarter, Nu's deposits rose 38% to $23.7 billion and its interest-earning portfolio 91% to $8.2 billion. Nu is a top growth stock that should outperform the market for the foreseeable future.
3. Floor, Decor Floor & Decor sells flooring in small warehouse-style stores. What interested Buffett? Simple models can be the most powerful. The tiny size of Floor & Decor makes it appealing. Opening more stores will provide it years of growth despite its rapid development. Before inflation hit in 2022, it had high comparative sales (comps) growth, indicating a sustainable long-term growth model. Floor & Decor is under pressure due to sluggish growth. Smart investors see the big picture.
Sales rose 3.5% in 2023, but comps fell 7.1%. Operating margin fell 2 percentage points to 7.3%, while EPS fell 18% to $2.28. Management expects sales to rise 6.4%, comps to fall 3.5%, and EPS to be $1.95 in 2024. While down from 2022, fourth-quarter EPS of $0.34 topped Wall Street's $0.26 estimates by a significant margin. Last year, the firm launched 31 outlets and plans to open 30–35 this year. It had 221 stores in 2023 and hopes to reach 500 in eight years.
These new stores boost revenue while pressuring comps. Risen interest rates, a stagnant property market, and inflation have affected the home renovation business, making significant purchases like flooring tougher. Most firms will experience cyclical pressure at various times. Floor & Decor has a long new store growth runway and an efficient model. Best moment to buy for long-term benefits.
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