Latest news with #CharlieMunger
Yahoo
5 days ago
- Business
- Yahoo
3 Reasons to Sell AXS and 1 Stock to Buy Instead
AXIS Capital trades at $97 per share and has stayed right on track with the overall market, gaining 8.7% over the last six months. At the same time, the S&P 500 has returned 4.1%. Is there a buying opportunity in AXIS Capital, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team's opinion, it's free. Why Is AXIS Capital Not Exciting? We're swiping left on AXIS Capital for now. Here are three reasons why AXS doesn't excite us and a stock we'd rather own. 1. Long-Term Revenue Growth Disappoints In general, insurance companies earn revenue from three primary sources. The first is the core insurance business itself, often called underwriting and represented in the income statement as premiums earned. The second source is investment income from investing the 'float' (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities. The third is fees from various sources such as policy administration, annuities, or other value-added services. Regrettably, AXIS Capital's revenue grew at a sluggish 3.8% compounded annual growth rate over the last five years. This was below our standard for the insurance sector. 2. Net Premiums Earned Points to Soft Demand Markets consistently prioritize net premiums earned growth over investment and fee income, recognizing its superior quality as a core indicator of the company's underwriting success and market penetration. AXIS Capital's net premiums earned has grown at a 2.5% annualized rate over the last two years, much worse than the broader insurance industry and slower than its total revenue. 3. Previous Growth Initiatives Haven't Impressed Return on equity (ROE) is a crucial yardstick for insurance companies, measuring their ability to generate returns on the capital provided by shareholders. Insurers that consistently deliver superior ROE tend to create more value for their investors over time through strategic capital allocation and shareholder-friendly policies. Over the last five years, AXIS Capital has averaged an ROE of 9.5%, uninspiring for a company operating in a sector where the average shakes out around 12.5%. Final Judgment AXIS Capital isn't a terrible business, but it doesn't pass our bar. That said, the stock currently trades at 1.3× forward P/B (or $97 per share). This valuation multiple is fair, but we don't have much faith in the company. We're fairly confident there are better investments elsewhere. We'd recommend looking at one of Charlie Munger's all-time favorite businesses. Stocks We Would Buy Instead of AXIS Capital Trump's April 2024 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines. Take advantage of the rebound by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today. StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
11-07-2025
- Business
- Yahoo
2 Warren Buffett Stocks That Could Set You Up for Life
Berkshire Hathaway's leadership change doesn't mean a shift in strategy. Mastercard leads an industry with massive remaining whitespace. Both companies are built to perform well over the long run. 10 stocks we like better than Berkshire Hathaway › Warren Buffett, arguably the greatest investor of all time, is renowned for his long-term investment approach. He's been quoted as saying that his favorite holding period is forever. For those looking to apply Buffett's wisdom -- which might not be such a bad idea considering his track record -- it's helpful to consider investing in the stocks he loves. With that said, let's consider two Buffett-approved stock picks that look likely to provide terrific returns for a long time: His own Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) and Mastercard (NYSE: MA). Buffett surprised the investment world earlier this year when he announced that he would be stepping down as CEO of Berkshire Hathaway at the end of the year. It was bound to happen eventually, as he's well into his 90s, but now that it's official, some might wonder whether the conglomerate can generate the same kinds of returns under different management. My view is that it can. Warren Buffett and his late right-hand man, Charlie Munger, who passed away in 2023, spent decades building a remarkable business and grooming its next generation of leaders to step into their shoes. Looking at the business first, Berkshire Hathaway boasts dozens of subsidiaries across various major industries, including insurance, energy, railroads, and apparel. Some of the companies' brands are well known in their fields: GEICO, Fruit of the Loom, and Duracell come to mind. Additionally, Berkshire Hathaway has a portfolio comprising over 30 holdings, which further enhances diversification. That's one of the company's strengths; it is diversified enough to survive even the most severe downturns. Some of Berkshire Hathaway's subsidiaries (or companies in which it holds shares) will perform relatively well even when others aren't. What about the company's next leaders? The man who will soon become the CEO of Berkshire Hathaway is Greg Abel, the current CEO of Berkshire Hathaway Energy. He has been with the company for years and has risen through the ranks, likely absorbing Buffett's and Munger's wisdom along the way to the top. Abel has been responsible for the company's non-insurance operations, including its energy and railroad businesses, for a while. That already says something about Abel. But he won't be alone. Todd Combs and Ted Weschler, Buffett's investing lieutenants, have been responsible for 10% of the company's portfolio for a decade. Ajit Jain, VP of insurance operations, has been responsible for that side of the business for a long time. Berkshire Hathaway's robust underlying operations and its next generation of leaders should lead the company into a new era of success that is likely to last for decades, just like the old one under Buffett and Munger. Though things are changing, the stock remains a top long-term pick. Berkshire Hathaway first bought a sizable share of Mastercard in 2011. Here's how the stock has performed since. Clearly, this was a great decision. Although Mastercard has crushed the market in the past 14 years, it's not too late to invest in the stock. Mastercard operates a payment network that facilitates debit and credit card transactions by connecting merchants with issuing banks -- the institutions that provide these cards. Mastercard's role is that of an intermediary. The company is an undisputed leader in its niche. There are millions of cards branded with its logo in circulation, and few respectable businesses do not accept them as a form of payment. Mastercard benefits from a powerful network effect. The more consumers own cards branded with its logo, the more attractive its ecosystem is to merchants. Some might argue that since card transactions are already widespread, there isn't much room left for Mastercard to grow. However, nothing could be further from the truth. Here are two powerful long-term tailwinds the company should benefit from for years to come. First, Mastercard estimates that there is still over $12 trillion in cash and check transactions worldwide, which creates a significant opportunity to bring more of that into its ecosystem. Second, the growth of the e-commerce market will create a need for more digital payment methods, including the kinds that the company offers. Cash and checks are usually not an option when buying things online. Mastercard will have to contend with competition from its eternal rival, Visa. However, there is more than enough space for both leaders to thrive, as they have over the past decade (and beyond). Expect Mastercard to continue performing well over the long term, and it's worth noting that its excellent dividend program makes the stock even more attractive. Despite a meager 0.5% forward yield, Mastercard has increased its dividend by 375% over the past decade. Mastercard is an excellent pick for growth and income-oriented long-term investors. Before you buy stock in Berkshire Hathaway, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Berkshire Hathaway wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $694,758!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $998,376!* Now, it's worth noting Stock Advisor's total average return is 1,058% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of July 7, 2025 Prosper Junior Bakiny has positions in Berkshire Hathaway and Mastercard. The Motley Fool has positions in and recommends Berkshire Hathaway, Mastercard, and Visa. The Motley Fool has a disclosure policy. 2 Warren Buffett Stocks That Could Set You Up for Life was originally published by The Motley Fool
Yahoo
08-07-2025
- Business
- Yahoo
3 Reasons to Sell DGX and 1 Stock to Buy Instead
Quest's 12.9% return over the past six months has outpaced the S&P 500 by 7.7%, and its stock price has climbed to $173.97 per share. This was partly thanks to its solid quarterly results, and the run-up might have investors contemplating their next move. Is there a buying opportunity in Quest, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it's free. Despite the momentum, we're swiping left on Quest for now. Here are three reasons why we avoid DGX and a stock we'd rather own. Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful Testing & Diagnostics Services company because there's a ceiling to what customers will pay. Quest's requisition volumes came in at 59 million in the latest quarter, and over the last two years, averaged 4.5% year-on-year growth. This performance slightly lagged the sector and suggests it might have to lower prices or invest in product improvements to accelerate growth, factors that can hinder near-term profitability. Adjusted operating margin is a key measure of profitability. Think of it as net income (the bottom line) excluding the impact of non-recurring expenses, taxes, and interest on debt - metrics less connected to business fundamentals. Looking at the trend in its profitability, Quest's adjusted operating margin decreased by 10.3 percentage points over the last five years. This raises questions about the company's expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Its adjusted operating margin for the trailing 12 months was 15.7%. A company's ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity). We like to invest in businesses with high returns, but the trend in a company's ROIC is what often surprises the market and moves the stock price. Unfortunately, Quest's ROIC has decreased over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities. Quest's business quality ultimately falls short of our standards. With its shares beating the market recently, the stock trades at 17.6× forward P/E (or $173.97 per share). Beauty is in the eye of the beholder, but our analysis shows the upside isn't great compared to the potential downside. We're pretty confident there are more exciting stocks to buy at the moment. Let us point you toward one of Charlie Munger's all-time favorite businesses. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
Yahoo
29-06-2025
- Business
- Yahoo
Warren Buffett's 4 goals contain lessons for all investors! Here they are
Back in 2009, Berkshire Hathaway Chair Warren Buffett published his shareholders' letter covering the prior year. With its financial crisis and nervous stock markets, 2008 has some similarities to what we have seen so far in 2025. For now, fortunately, things are not as bleak in the markets as they were back then – though, of course, that can change. In the letter, Buffett said that, 'in good years and bad, Charlie (Munger) and I simply focus on four goals'. At least two of those goals are worth considering even for an investor with just a small amount of money to put in the stock market, I reckon. One was maintaining what Warren Buffett described as 'Berkshire's Gibraltar-like financial position'. This included a large degree of excess liquidity, keeping short-term financial obligations modest, and diversifying sources of earnings and cash. Of course those things are easier when dealing with billions of pounds like Berkshire, not a few hundred or thousands like many small private investors. But they are still possible on a small scale – and I think smart investors will act like Buffett in this regard. By the way, note that even in a very compact summary, Buffett distinguished between earnings and cash. They are not the same thing. Especially in a crisis, as the old saying goes, 'cash is king'. It is not by accident that Berkshire ended the first quarter of this year sitting on an incredible $348bn cash pile. Another of Warren Buffett's four goals was 'widening the 'moats' around our operating businesses that give them durable competitive advantages'. A moat is a metaphor Buffett often uses for a competitive advantage. Like a moat around a castle, it helps keep rivals at bay. Not only does Buffett look for a moat – he says here that he focuses on trying to widen it. He is talking about businesses that Berkshire fully owns. But I think the same logic can be applied to owning shares in a company. Indeed, Warren Buffett likes to invest in companies that have wide moats and ideally ones that grow instead of shrinking. To illustrate, consider Berkshire's longstanding investment in Coca-Cola (NYSE: KO). It has been a phenomenal success both in terms of share price growth and dividends. The sugary drink maker has grown its dividend per share for 64 years on the trot. What is its moat? For starters, its namesake product has a unique formulation and strong brand. That allows Coca-Cola to charge a premium price. By offering a wide range of soft drinks, Coca-Cola has a fuller offering than some rivals, like UK soft drinks makers A G Barr and Nichols. That, along with an extensive global distribution network, can make it more appealing to stockists. This business formula, like its drinks formula, is simple but keeps a lot of people happy. Can it last? Like any smart investor, Warren Buffett is keenly alert to risks. I do think the unhealthy nature of many Coca-Cola products is a long-term risk to sales. That is partly offset by the variety of drinks it sells, though. Just as at a castle, a moat does not need to be complex to be highly effective. The post Warren Buffett's 4 goals contain lessons for all investors! Here they are appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool C Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended A.G. BARR and Nichols Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
28-06-2025
- Business
- Yahoo
Is Roblox (NYSE:RBLX) Using Debt In A Risky Way?
The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says 'The biggest investment risk is not the volatility of prices, but whether you will suffer a permanent loss of capital.' It's only natural to consider a company's balance sheet when you examine how risky it is, since debt is often involved when a business collapses. As with many other companies Roblox Corporation (NYSE:RBLX) makes use of debt. But the real question is whether this debt is making the company risky. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. Generally speaking, debt only becomes a real problem when a company can't easily pay it off, either by raising capital or with its own cash flow. Part and parcel of capitalism is the process of 'creative destruction' where failed businesses are mercilessly liquidated by their bankers. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Having said that, the most common situation is where a company manages its debt reasonably well - and to its own advantage. When we think about a company's use of debt, we first look at cash and debt together. The chart below, which you can click on for greater detail, shows that Roblox had US$1.01b in debt in March 2025; about the same as the year before. However, its balance sheet shows it holds US$2.74b in cash, so it actually has US$1.74b net cash. According to the last reported balance sheet, Roblox had liabilities of US$3.82b due within 12 months, and liabilities of US$3.34b due beyond 12 months. Offsetting this, it had US$2.74b in cash and US$425.2m in receivables that were due within 12 months. So its liabilities total US$3.99b more than the combination of its cash and short-term receivables. Given Roblox has a humongous market capitalization of US$71.2b, it's hard to believe these liabilities pose much threat. Having said that, it's clear that we should continue to monitor its balance sheet, lest it change for the worse. While it does have liabilities worth noting, Roblox also has more cash than debt, so we're pretty confident it can manage its debt safely. There's no doubt that we learn most about debt from the balance sheet. But ultimately the future profitability of the business will decide if Roblox can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts. View our latest analysis for Roblox In the last year Roblox wasn't profitable at an EBIT level, but managed to grow its revenue by 30%, to US$3.8b. With any luck the company will be able to grow its way to profitability. While Roblox lost money on an earnings before interest and tax (EBIT) level, it actually generated positive free cash flow US$877m. So taking that on face value, and considering the net cash situation, we don't think that the stock is too risky in the near term. The good news for Roblox shareholders is that its revenue growth is strong, making it easier to raise capital if need be. But that doesn't change our opinion that the stock is risky. The balance sheet is clearly the area to focus on when you are analysing debt. However, not all investment risk resides within the balance sheet - far from it. To that end, you should be aware of the 2 warning signs we've spotted with Roblox . At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
