We recently published a list of Growth Stock Portfolio: 12 Stock Picks By Warren Buffett. In this article, we are going to take a look at where HEICO Corporation (NYSE:HEI) stands against the other growth stock picks by Warren Buffett.
Warren Buffett’s Berkshire Hathaway portfolio has long been a beacon for value investors looking for high-quality businesses with long-term competitive advantages. Since taking over as CEO of Berkshire six decades ago, the appropriately named “Oracle of Omaha” has outperformed the broader market.
As we approach 2025, some of Berkshire’s assets stand out as promising opportunities, combining excellent fundamentals with acceptable values despite the market’s sustained emphasis on technology and growth stocks.
Berkshire’s CEO is a strong believer in portfolio concentration. Buffett’s investment strategy revolves around choosing companies with significant competitive advantages, effective management teams, and the potential to create regular free cash flow. His concept focuses on buying exceptional firms at acceptable costs rather than inferior enterprises at low rates. This strategy has proven successful across numerous market cycles, with Berkshire Hathaway providing compound yearly returns significantly higher than market averages over several decades.
The “Oracle of Omaha” concentrates on companies he understands, avoiding complex technologies or models with uncertain earnings potential. He looks for companies with pricing power, great brand awareness, and the ability to preserve or grow market share even during economic downturns. Buffett’s conservative yet effective approach has helped him become one of history’s most successful investors.
Following the filing of Berkshire’s 13F on February 14, we now know that 60% ($180 billion) of Buffett’s $299 billion portfolio is concentrated in just four magnificent stocks.
Japanese stock investors are attentively watching Buffett’s letter in the hopes of gaining information that may affect the country’s trading houses. Buffett has previously approved Japanese trading companies, resulting in increased stock value. Market participants will examine his comments for clues about the future of these companies, particularly as they are impacted by decreasing energy prices and pressure from the US government to reduce oil expenses.
As usual, Buffett’s shareholder letter is expected to provide significant insights not only into Berkshire Hathaway’s performance but also into market trends.
Methodology
For this article, we scanned Warren Buffett’s Q4 2024 portfolio. We then chose 12 stocks with the highest 5-year average revenue growth (YoY) and ranked accordingly.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A fighter jet in formation, revealing the prowess of the companies defense arm.
HEICO Corporation (NYSE:HEI)
5-year average revenue growth (YoY): 14.43%
Warren Buffett’s Growth Stock Portfolio includes HEICO Corporation (NYSE:HEI), which is a supplier to the aerospace and defense industries that specializes in producing specialized replacement parts for commercial aircraft and defense product components. It is divided into two parts: the flight support group (FSG) and the electronic technologies group (ETG), which provide varying degrees of support to the defense and aerospace industries. The company consistently pursues acquisitions, concentrating on businesses in related or nearby industries that have significant cash flow and promising future growth.
HEICO Corporation (NYSE:HEI)’s ability to supply components for aircraft and systems at later phases of their service life is often limited by long-term service contracts with engine OEMs or lease agreements designed to preserve the aircraft’s resale value, which is why the majority of operators of newer aircraft continue to use OEM parts.
HEICO Corporation (NYSE:HEI) is also acknowledged as a key player in the space industry, having supplied vital mission components for India’s Chandrayaan-3 spacecraft, which landed on the Moon in 2023.
HEICO Corporation (NYSE:HEI) released strong results for the full year 2024 on December 17. The company’s net income increased 27% yearly to a record $514.1 million. The firm also announced a semiannual cash dividend of 11 cents per share. This was HEICO’s 93rd consecutive semiannual cash dividend since 1979, showing the company’s steadfast dedication to shareholder returns.
Overall, HEI ranks 4th on our list of Warren Buffett’s top growth stock picks. While we acknowledge the potential for HEI as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HEI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
