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 Mastercard Incorporated (NYSE:MA) stands against 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.
A woman using a payment terminal at the checkout of a store showing payment products and solutions.
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).
Mastercard Incorporated (NYSE:MA)
5-year average revenue growth (YoY): 11.22%
The American credit card firm Mastercard Incorporated (NYSE:MA), which is among Warren Buffett’s Growth Stock Portfolio, provides its customers with a variety of payment processing and related services. Since its initial public offering (IPO) in 2006, Mastercard has demonstrated an impressive total return CAGR of 29.9%, making it one of the best investments throughout the years. This type of performance shows the company’s resilience and the longevity of its business strategy, which is shielded from external competition and inflation.
Raymond James maintained its Outperform rating on the stock and increased its price target from $614 to $640 after the firm reported solid earnings in the fourth quarter of 2024. The company underlined Mastercard Incorporated (NYSE:MA)’s steady performance and pointed out that although preliminary estimates might be lower, this is mostly because of fluctuations in foreign exchange rates and operating expenses associated with transactions.
Mastercard Incorporated (NYSE:MA) made $7.5 billion in revenue in the fourth quarter of 2024, a 14% increase over the same period the previous year. The company’s net income increased from $3 billion to $3.5 billion during the quarter. Customers had received 3.5 billion Mastercard and Maestro-branded cards by December 31, 2024.
At the conclusion of the quarter, Mastercard Incorporated (NYSE:MA) had more than $8.4 billion in cash and cash equivalents, while its total assets exceeded $19.7 billion. The company’s operating cash flow increased from $12 billion in fiscal year 2023 to $14.7 billion in fiscal year 2024. This financial strength enabled them to return $2.4 billion to shareholders in dividends throughout the year. It has raised dividends for 13 years in a row.
Overall, MA ranks 8th on our list of Growth Stock Portfolio: 12 Stock Picks By Warren Buffett. While we acknowledge the potential for MA to grow, 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 MA 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.
