Chris Neiger, The Motley Fool
5 min read
In This Article:
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Warren Buffett is retiring from Berkshire Hathaway, but the portfolio of stocks he built still offers insights into great investment opportunities.
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Amazon continues to dominate U.S. e-commerce and cloud computing.
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American Express has been a Buffett favorite for decades and looks well priced right now.
With Warren Buffett's recent announcement that he's stepping down as the CEO of Berkshire Hathaway, it's worth taking a look at a couple of stocks in his company's $286 billion portfolio that look like good buys right now.
Two standouts among the many great options are Amazon (NASDAQ: AMZN) and American Express (NYSE: AXP). Here's why you should consider picking up their shares now.
There are some legitimate concerns being raised about the retail and e-commerce industries right now in light of all the tariff uncertainty. Amazon isn't immune, and its CEO Andy Jassy said on the company's first-quarter earnings call, "Obviously, none of us know exactly where tariffs will settle or when."
But focusing too much on tariffs compared to Amazon's long-term opportunities is probably a mistake. For one, the company has 40% of the U.S. e-commerce market, easily outpacing Walmart's 7% share.
Its North American sales have also been very strong lately, jumping 8% in the most recent quarter to $93 billion, showing that Amazon continues to expand its e-commerce footprint.
But it's not just e-commerce that makes Amazon an enticing stock. The company also has the largest cloud computing service, Amazon Web Services (AWS), with 30% of the market compared to Microsoft Azure's 21%. AWS accounts for about 63% of the parent company's total operating income, making the business a crucial part of Amazon's long-term plans.
Many companies are focusing on expanding their artificial intelligence (AI) cloud services lately, and it's a huge opportunity for AWS. Cloud revenue could become a $2 trillion market over the next five years as AI fuels demand, and Amazon's leading cloud platform gives it an edge in this space.
To top it all off, Amazon's stock looks relatively well priced right now. The stock's trailing price-to-earnings ratio is 34, a bit higher than the S&P 500's 28 but cheaper than Walmart's P/E of 40.
One of Buffett's favorite stocks has been American Express, which he bought in 1991 and is now Berkshire Hathaway's second-largest holding.
American Express continues to grow even as some investors have worried that early impacts of President Donald Trump's tariffs could slow spending. That doesn't seem to be the case yet, with the company's revenue increasing 7% in the first quarter (which ended March 31) to about $17 billion and its earnings per share (EPS) rising 9% to $3.64.
