Warren Buffett-owned Berkshire Hathaway has exposure to high-flying growth stocks such as Apple, Stone Co and Snowflake at the end of Q1.
There are several ways to invest your savings in the stock market. You can be an active investor and identify quality stocks that can potentially derive market-thumping gains over the long term. Investors can also gain exposure to equities passively by purchasing exchange-traded funds or ETFs. Alternatively, you can also replicate the buying patterns of financial moguls like Warren Buffett.
Berkshire Hathaway (NYSE: BRK.B) is a business conglomerate run by Warren Buffett, which has exposure to several blue-chip companies. Warren Buffett, also known as the Oracle of Omaha, and his investment team at Berkshire identify companies with comprehensive economic moats trading at a discount.
Let's take a look at three growth stocks that are part of Warren Buffett's portfolio.
Apple
One of the largest companies in the world, Apple (NASDAQ: AAPL), accounts for 39% of Berkshire's equity portfolio. While the iPhone still accounts for most of Apple's sales, the tech heavyweight has diversified its revenue base considerably over the last few years.
The Services business is now the second-largest segment for Apple, which includes subscription verticals such as Apple Music, Apple Care, and Apple TV+. In addition, Apple recently launched a buy now, pay later product and might also enter the electric vehicle segment in the near future.
It ended the March quarter with $193 billion in cash and generated over $100 billion in free cash flows in the last four quarters. The company's robust cash flows allowed it to return around $27 billion to shareholders via dividends and repurchases over the previous 12 months. AAPL stock is trading 18% below all-time highs but has returned 752% to investors in dividend-adjusted gains since June 2012.
Snowflake
One of the fastest-growing SaaS stocks on the planet, Snowflake (NYSE: SNOW) is trading 68% below record highs, valuing the company at $42.4 billion by market cap. In fiscal Q1 of 2023 (ended in April), Snowflake's product revenue grew by 84% year-over-year to $394 million. It ended the quarter with remaining performance obligations of $2.6 billion while adding 16 Global 2000 customers.
Snowflake reported an adjusted free cash flow of $181 million in Q1 on the back of improving unit economics and higher operational efficiency. Its net revenue retention rate stood at 174%, suggesting existing customers increased spending by 74% on the Snowflake platform. It includes 11 new customers with an annual contract value (ACV) of over $1 million, while 10 customers outlined in Q1 crossed the $5 million threshold in the last 12 months.
Snowflake confirmed it now has 45 customers with an ACV of over $1 million and 10 customers with an ACV of over $10 million.
StoneCo
Another growth stock that's part of Berkshire Hathaway's portfolio is StoneCo (NASDAQ: STNE), which is down 87% from all-time highs. A Brazil-based fintech company, StoneCo is valued at a market cap of $3.75 billion.
StoneCo provides a wide range of services to small and medium enterprises in South America, including point-of-sale devices and other payment technology solutions. The company is forecast to increase sales by 91% to $1.8 billion, while adjusted earnings are forecast to more than double to $0.37 per share in 2022.
We can see that STNE stock is valued at just over 2x forward sales and a price to earnings multiple of 32x, which is quite reasonable for a growth stock.
