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Crash: 3 Warren Buffett shares fell between 15% and 90% that are now a buy

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Warren Buffett CEO Berkshire Hathaway Oracle of Omaha

One of Warren Buffett’s most famous aphorisms is that it pays to be “fearful when others are greedy and greedy when others are fearful.” Given the numerous risk factors, it is fair to say that fear reigns supreme at this time: The Nasdaq Composite Index is in the correction area and the S&P 500 also weakens.

While there could be more price volatility in the near future, stocks are probably still the best way to build long-term wealth. The stock portfolio of Berkshire Hathaway it is a good starting point for investors looking for stocks with better returns than the market. Three Motley Fool contributors believe long-term investors would be wise to buy these Buffett shares now.

Apple’s Strong Competitive Advantages

Parkev Tatevosian: Investors have not had many opportunities in recent years Apple– Stocks (NYSE:TSM) even when prices are falling. The tech giant has grown to a market capitalization of over $2 trillion and has made many shareholders rich along the way.

One of the most famous of these shareholders is Warren Buffett. Apple is the largest holding in Berkshire Hathaway’s stock portfolio today. And who could blame him for sticking to that position? Apple’s revenue has grown by more than $200 billion over the past decade. Even more impressive, the company’s operating income jumped from $55 billion in 2012 to $109 billion in 2021.

Apple achieves excellence through innovation. Time and time again, the company has released new products or newer versions of older products that consumers simply must have and are willing to pay a higher price for. The iPhone, for example, has been around for more than a decade, and in the most recent quarter ending December 25, Apple sold $71.6 billion worth of new versions.

Strong customer loyalty is undoubtedly one of the qualities Buffett values ​​in an investment, and Apple offers it in abundance. The company also generates strong profit margins from these customers. Of course, the competitors will try to compete in the market. Apple has shown that it can defend its competitive advantage by offering a variety of attractive features. Anyone who is once in the Apple cosmos usually gets caught up in it.

Of course, the correction is not necessarily pleasant. But it has opened up an opportunity for investors to buy Apple shares at a 12% discount at the peak.

Buffett’s commitment to real estate retail

Jason Hall: E-commerce has undoubtedly changed the retail landscape, and online shopping is likely to continue to reshape the market. At the same time, however, there are also many retail companies that are doing more than just surviving. This includes experiential retailers, fast-casual and fast-food restaurants, and retailers using their stores as part of their omnichannel strategies.

Many of these companies, especially those that prefer to operate in separate physical locations, do not necessarily want to own the land or buildings. Real estate is capital intensive, often requires high levels of debt, and can make it difficult to allocate resources to your core business.

Here it comes STORE Capital (WKN: A12CRU) comes into play, which has a huge list of tenants that it works with to find and manage their property locations. STORE Capital purchases the properties and then leases them to tenants under long-term contracts that also include property taxes and building maintenance. This has been an excellent deal for STORE Capital, which has seen a 189% increase in working capital and a 238% increase in dividends since the IPO. But the stock is down more than 21% from its all-time high.

Buffett could see an opportunity for investors to buy here while others fear others.

Fintech with high growth potential

Keith Noonan Stone Co. (WKN: A2N7XN) is one of the worst performing stocks in Berkshire Hathaway’s portfolio over the past year. Fortunately for Buffett, it’s a relatively small stake in his conglomerate. But the drop in the valuation of the Brazilian fintech was impressive.

StoneCo shares are down about 90% from their February 2021 high, and there’s a good reason the market has re-rated the stock. While US inflation has reached multi-decade highs, the situation in Brazil is even worse and the economy of the Latin American country is suffering from the continued negative impact of the coronavirus pandemic.

To make matters worse, Brazil has introduced new regulatory standards for credit and lending in response to the difficult economic environment. These have resulted in significant losses in StoneCo’s lending business, prompting the company to stop lending to small and medium-sized businesses.

Last year brought bad news to StoneCo shareholders, but StoneCo continues to grow. Despite the uncertain outlook for the lending business, commercial payment processing services continue to see encouraging uptake and growth in overall payment volume.

Also, StoneCo’s big drop now means an interesting entry point. The market capitalization is now around $2.8 billion and the shares are trading at 1.8 times this year’s expected sales and 23 times future earnings. Admittedly, StoneCo’s short-term earnings outlook looks bleak. But the difficult conditions appear to have created a valuable buying opportunity for long-term investors.

Crash: 3 Warren Buffett shares fell between 15% and 90% that are now a buy item that first appeared in The Motley Fool Germany.

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Jason Hall owns shares of STORE Capital and Stoneco LTD. Keith Noonan owns shares of Stoneco LTD. tatevosian parkev owns Apple stock. The Motley Fool owns and recommends shares of Apple, Berkshire Hathaway (B-shares) and Stoneco LTD, and recommends STORE Capital . This article was published on 03/17/2022 on Fool.com and has been translated for our German readers.

Motley Fool Germany 2022

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