Historically, Warren Buffett has focused on high-performance, well-established American banking, insurance and staples stocks. Often buying names that pay investors significant dividends. In recent years, however, he has become more diversified, buying shares of some tech stocks and a number of developing-market plays. As an investor who believes that buying growth stocks, overseas equities and turnaround plays can be much more profitable than focusing on U.S. value plays and staple producers, I certainly endorse the Oracle of Omaha’s transformation.
While American insurance stocks, staple producers and value stocks in general can generate profits and will never lose anyone much money. They will also never triple or quadruple in a few years like great growth stocks can. Here are three somewhat under-the-radar Warren Buffett stocks that can generate high profits for investors relatively quickly.
Citigroup (C)
Struggling Citigroup (NYSE:C) looks well-positioned for a big turnaround. The bank recently recruited the head of JPMorgan’s (NYSE:JPM) investment-banking unit, Vis Raghavan, to become its head of banking. According to an anonymous source at Citi, Raghavan, who just got promoted to head of investment banking in January by JPM, did a good job during his tenure at the latter bank.
Indeed, according to JPM, its global investment banking unit achieved the #1 ranking for global investment banking fees last year. Additionally, its gross investment banking and markets revenue soared 32% last quarter versus the same period a year earlier.
Meanwhile, the revenue generated by Citi’s banking unit sank 15% last year, and Citi’s investment bank has consistently lagged behind rivals. Given these points, I’m confident that Raghavan will turn around Citi’s banking unit.
Moreover, Citi, which has a large overseas presence, is cutting costs a great deal and should benefit from economic strength in the U.S. and other parts of the world, such as India and Latin America. The forward price-earnings ratio of C stock is a tiny 9.4, making its valuation quite attractive. At the end of Q4, Buffett owned 55.2 million shares of C stock.
Atlanta Braves Holdings (BATRA)
The owner of the Atlanta Braves baseball team, multi-billionaire John Malone appears to be looking to sell the team by the end of 2025. According to Boyar Intrinsic Value Research President Jonathan Boyer, if the Braves are sold, the value of Atlanta Braves Holdings (NASDAQ:BATRA) stock would soar to $55 per share, versus its current level of $42.35.
Also noteworthy is that the teams’ revenue climbed 9% in 2023 to $640.7 million. Further, the team reported on Feb. 28 that its season tickets were already sold out for the 2024 season ,while the company is upgrading its stadium in order to drive more commercial opportunities.
That reasoning apparently appealed to Buffett, as his company, Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), owned about 224,000 shares of the stock as of the end of last quarter. Buffett’s company owned about 4 million shares of BATRA stock.
Nu Holdings (NU)
Nu Holdings (NYSE:NU) provides digital banking platform and digital financial services in Brazil, Mexico and Colombia.
The fintech firm is clearly benefiting from strong economic growth and rapid digitalization in a number of its markets. Its top line soared 65.5% last quarter versus the same period a year earlier to $1.4 billion, while its net income, excluding certain items, soared 3.5 times to $396 million. Also noteworthy is that Nu’s customer base rose by a net total of 4.8 million in Q4 and by 19.3 million versus Q4 of 2022.
Nu’s CEO, David Velez-Osomo, noted that the firm emphasizes ” fast customer expansion, expanding revenue per customer and efficient operating costs ” That formula is clearly working.
In 2024, Nu plans to significantly grow its customer base and the amount of credit it provides in Mexico. It also intends to generate meaningful loan growth in Brazil. The firm notes that it can provide interest rates “20% to 30%” below those of its competitors because of its direct-to-consumer approach. As a result, I believe that the firm has a great deal of growth ahead of it, making it one of the best Warren Buffett stocks to buy.
Berkshire owned 107.1 million shares of Nu as of the end of Q4.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
