We recently compiled a list of the 8 Best Warren Buffett Stocks to Buy According to Analysts. In this article, we are going to take a look at where Visa Inc. (NYSE:V) stands against the other Best Warren Buffett Stocks to Buy.
2024 will go down in history as the year that legendary investor Warren Buffett started showing signs of slowing down after an illustrious career in the investment world. After losing his best friend and longtime partner, Charlie Munger, the Oracle of Omaha increasingly shows signs of relinquishing control of his investment empire.
Even with his investment company becoming the first non-tech giant to hit the $1 trillion mark on market cap, Buffett is slowly relinquishing control after years of tremendous success. Handpicked Greg Abel is now responsible for taking over the Buffett Empire after more than 60 years in the limelight.
READ ALSO: Carl Icahn Stock Portfolio: 7 Best Stocks to Buy and 10 Best Performing Warren Buffett Stocks in 2024.
As Abel assumes control in making key investment decisions, Buffett continues sending shockwaves. Nevertheless, he has become a net seller, having trimmed stakes in some high-profile holdings, all but raising concerns about the market outlook.
At 94, Buffett has seen it all, having outperformed the S&P 500 over the years and generated significant returns for his investors. Since 1965, the billionaire investor has averaged returns of 19.8% through his investment firm, nearly double the 10.2% return of the S&P 500 over the same period. Nevertheless, he appears to have hit the peak of his investment career as he became a net seller after one of the longest bull runs.
The recent sales have taken Buffett’s cash haul to the $300 billion mark, which he can use to purchase a good chunk of the S&P 500 companies. Nevertheless, the billionaire investor has shown reluctance to invest in the cash-sitting valuations that have gotten out of hand.
Since Buffett has yet to carry out a massive investment this year, it does not come as a surprise. The advocate of value investing, which involves analyzing the market for undervalued stocks likely to generate long-term value, has been skeptical about valuations.
His reluctance also comes on outperformance in recent years, becoming extremely difficult due to the sheer size of Buffett’s investment portfolio. “We have no possibility of eye-popping performance” given that “there remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others,” Buffett is quoted as saying in an interview with CNBC.
With the S&P 500 up by more than 20% for the year, Buffett has indicated that the market might be too expensive to pursue opportunities at current levels. Consequently, he has opted to stay in cash while locking in profits through buybacks and dividends in some of his top investment plays.
Nevertheless, the market is still full of some of the best Warren Buffett stocks that analysts see material upside to. In the aftermath of the US Federal Reserve cutting interest rateby 50 basis points and indicating the prospects of further cuts before year-end, opportunities are increasingly emerging around some of Buffett’s top investment plays
Even as Buffett waits for the market to correct to deploy the more than $300 billion at his disposal, there are still opportunities to pursue as interest rates trend down. With that, let’s look at the 8 best Warren Buffett stocks to buy according to analysts.
Our Methodology
To compile the list of the best Warren Buffett stocks to buy according to analysts, we sifted through Berkshire Hathaway’s Q2 2024 13F portfolio. We scanned all the 13F holdings and picked the 8 stocks that had the highest upside potential, as of September 24. We have ranked the stocks in ascending order based on their upside potential.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Visa Inc. (NYSE:V)
Warren Buffett’s Q2 2024 Stake: $2.18 Billion
Analyst Upside Potential, as of September 26: 17.50%
Number of Hedge Fund Holders: 163
Visa Inc. (NYSE:V) is a payment technology company in the US and internationally. Widely regarded as one of the best stocks for exposure to the global digital payments sector, Visa facilitates transactions across more than 200 markets, connecting 4 billion account holders with over 130 million merchants and 14,500 financial institutions.
Visa Inc. (NYSE:V)’s dominance in the payments industry is evident, with an estimated 61% share of the US payments volume. As more customers use Visa Inc. (NYSE:V), it becomes increasingly attractive to merchants, driving further growth. Strategic partnerships and a focus on technology, such as AI, are expected to support Visa’s growth. For instance, Visa’s acquisition of AI-focused Featurespace will help manage real-time fraud and protect its payment ecosystem.
Visa Inc. (NYSE:V) aims to capitalize on the $20 trillion global consumer payments opportunity, focusing on acceptance expansion, e-commerce, and product innovation. The company remains optimistic about sustaining growth in new flows, primarily in Visa Direct and the commercial business.
In Q3 2024, the company reported adjusted EPS of $2.42, up from $2.16 the previous year, with a 7% increase in payment volumes. Net revenue reached $8.9 billion, a 10% year-over-year increase. Service revenue rose 8% to $4 billion, data processing revenue increased 9% to $4.5 billion, and international transaction revenue grew 9% to $3.2 billion. Visa reaffirmed its full-year 2024 outlook, expecting low double-digit revenue growth and a low-teens EPS increase.
Visa Inc. (NYSE:V) is currently trading at a price-to-earnings multiple of 24.21, with a dividend yield of 0.73%. Analyst ratings for Visa Inc. (NYSE:V) are overwhelmingly positive, with 21 analysts offering ratings in the past three months. The average 12-month price target is $315.42, with a high forecast of $345 and a low forecast of $275, representing a 17.50% increase from the last price of $268.45. This strong buy consensus reflects the confidence analysts have in Visa’s continued growth and market leadership.
By the end of Q2 2024, 163 hedge funds held stakes in Visa Inc. (NYSE:V), with Chris Hohn’s TCI Fund Management being the largest shareholder, holding stakes valued at $4.4 billion.
Here is what Wedgewood Partners said about Visa Inc. (NYSE:V) in its Q2 2024 investor letter:
“Visa Inc. (NYSE:V) detracted from performance despite healthy corporate results. The company grew earnings per share +12% as payment volume growth was up +8% and cross-border payment grew +16%, adjusted for currency. There are over 4.4 billion Visa debit and credit cards in circulation generating over $15 trillion in volume over the past 12 months. There is another estimated $10 trillion in cash and check volume, globally, which we think Visa can continue to move over to its electronic payment rails. In addition, the company has spent the past several years extending its payment capabilities into new flows of commerce, particularly for business-to-business transactions. This is another, extremely large (+$200 trillion) long-term growth opportunity for Visa that we believe investors are ignoring.”
Overall V ranks 5th on our list of 8 Best Warren Buffett stocks to buy according to analysts. While we acknowledge the potential of V as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than V, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.