In the volatile stock market landscape, investors often seek guidance from the most successful figures in the industry. Warren Buffett, often called the Oracle of Omaha, is undeniably one of our time’s most revered and accomplished investors. His investment philosophy, characterized by a long-term perspective and a keen eye for value, has made him a legendary figure in finance.
Here, the article delves into the perspective of Buffett and examines three stocks that align with his investment principles in today’s fast-paced market. It spotlights three giants in their respective industries as they emphasize strategic initiatives to optimize operations and embrace advanced technologies to secure leadership positions.
From entertainment to communication, each company’s unique approach to long-term value creation and focus on innovation offers valuable insights into their strategies to thrive in the modern business landscape.
So here are the best Warren Buffett stocks to consider.
Walt Disney (DIS)
Walt Disney (NYSE:DIS) may continue to gain fundamental value due to its strategic initiatives and diverse revenue streams. To start with, Disney’s focus on restructuring its operations is a key driver of value. Disney has made management changes and efficiency improvements by placing creativity at the center of its business. Disney’s aggressive cost reduction measures to achieve $5.5 billion in savings show a focus on efficiency.
One of the core drivers of Disney’s long-term value is its direct-to-consumer business, led by Disney+. The company’s initial focus on subscriber growth has been successful, and it is now strategically shifting towards sustained profitability.
Disney’s approach involves rationalizing content volume, refining pricing, and marketing strategies, and optimizing the user experience through technology. For instance, introducing an ad-supported Disney+ option and bundling Hulu content with Disney+ are steps toward increasing revenue streams within the DTC segment. Notably, the ad-supported Disney+ option has already attracted 3.3 million subscribers.
Also, Disney’s upcoming unified one-app experience aims to enhance user engagement and reduce churn, further contributing to long-term growth. Furthermore, ESPN’s transition to a direct-to-consumer model is a vital strategic move. Despite cord-cutting trends, ESPN’s main linear channel continues to see increasing ratings, which creates advertising opportunities. Disney’s exclusive licensing arrangement with PENN Entertainment (NASDAQ:PENN) in the sports betting marketplace is a favorable avenue for growth and engagement with sports fans. This makes it one of those Warren Buffett stocks to buy.
Finally, Disney’s strategy to embrace multiple distribution windows at its film studios allows consumers to access content in various ways, such as electronic home video releases. For example, “Avatar: The Way of Water” is a box office hit and is set to become a top-performing electronic home video release.
AT&T (T)
AT&T (NYSE:T) intends to continue gaining fundamental value long-term, with a specific focus on key areas such as wireless.
One of AT&T’s core strengths lies in its wireless business. Over the last three years, the company has executed a strategy that has not only stopped the loss of market share but also generated growth in key metrics. This includes adding 8.3 million postpaid phone net subscribers, a significant increase from previous years.
Moreover, AT&T has reduced postpaid phone churn by 0.28% since the beginning of 2020. This indicates that its customers are increasingly satisfied with the network quality and customer experience.
The American Customer Satisfaction Index ranks AT&T as the number one in wireless customer satisfaction. Higher customer satisfaction translates into greater customer retention and, subsequently, more profitability. AT&T’s postpaid phone average revenue per user (ARPU) has increased by more than a dollar over the past three years. It reflects the value customers perceive in AT&T’s services. All in all, it’s one of those Warren Buffett stocks to buy.
In terms of wireless revenues and profitability, AT&T has achieved impressive growth. Quarterly wireless service revenues grew by about $2 billion, an increase of roughly 15% over three years. A material increase in profitability accompanies this growth. AT&T’s prepaid business, including Cricket, has also grown by adding prepaid voice customers to its high-value subscriber base.
In parallel, AT&T continues to invest in the future of its company and the nation’s connectivity infrastructure. With capital investments totaling about $65 billion since July 2020, the company is actively enhancing its 5G and fiber networks, contributing to the nation’s broadband infrastructure expansion.
Verizon (VZ)
Verizon (NYSE:VZ) may continue gaining value momentum for the long term. It can be attributed to its strategic deployment of advanced technologies such as 5G and AI.
Fundamentally, Verizon is embracing innovative solutions like private 5G and Multi-Access Edge Computing (MEC). Recent deals with organizations like the Cleveland Clinic, the VA, and the NFL highlight the growing demand for private 5G networks, highlights the reliability and security of Verizon offers. These new solutions open up exciting opportunities for revenue growth.
Notably, Verizon’s deployment of 5G technology in the sub-6 GHz and millimeter-wave spectrums is a significant driver of its future growth. By increasing the available spectrum and improving coverage, Verizon aims to offer its customers faster speeds and lower latency, which can enhance the user experience and enable new use cases.
Furthermore, adopting a 5G standalone core allows Verizon to offer network slicing, which dedicates specific network resources to various use cases. This can unlock opportunities in industries like gaming, where low latency and high bandwidth are crucial.
Network slicing also supports private 5G networks for enterprises with specific performance and security requirements. Verizon recognizes the potential of AI for improving productivity and customer service. AI can analyze vast amounts of network data. Thus, AI can optimize network performance and make quicker decisions, benefiting customer satisfaction and revenue generation.
Finally, at the same time, Verizon’s focus is on expanding fixed wireless access (FWA). As part of its broadband strategy, it is also a key growth driver. With a target of reaching 4 to 5 million FWA subscribers by 2025, Verizon is making strides in this market. This makes it one of those Warren Buffett stocks to pay attention to.
As of this writing, Yiannis Zourmpanos held a long position in DIS, T, and VZ. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
