Buy Or Sell These Stocks And We'll Tell You If You're The Next Warren Buffett
- by Tim Frederick
- – on
- in Lifestyle
Warren Buffett is an icon of the investing world and has long been dubbed the "Oracle of Omaha" for his uncanny ability to buy (and more importantly, hold) stocks that would eventually appreciate tremendously in value. The 87-year-old has become one of the wealthiest men in history through his investing prowess, with Forbes estimating his net worth at a cool $86 billion.
Someone who invested just $1,000 with Buffett's $520 billion holding company Berkshire Hathaway in 1964 would have seen their one grand swell to nearly $16 million over the last 54 years. That sure beat spending that money on the latest state-of-the-art 13-inch floor model TV.
Each year, Buffett releases a letter to the shareholders of Berkshire Hathaway in which he shares stories and pearls of investing wisdom. In his latest letter, Buffett stressed that investors should build a diversified portfolio of stocks and then try to limit their activity to only "big", "easy" trading decisions.
With that in mind, we want to see what kind of portfolio of stocks you would build if given the chance. Would you invest wisely in undervalued stocks or stocks with strong growth potential, or would you squander your money on overpriced equities or companies facing secular headwinds or other operational challenges?
Simply buy or sell each of the stocks in this quiz to see if you have what it takes to be the next Warren Buffett!
Would You Buy or Sell Shares of Netflix?
Market Cap: $126.44 Billion Netflix is on a roll, gaining a record 8.3 million new subscribers in the fourth-quarter, despite also hiking the price of its service by $1/month during the period. That's great news for the streaming company, which will likely need to rely on additional price hikes in the future to offset its bloated spending, which is expected to hit $8 billion this year, as Netflix aims to add 700 original new series to its platform. In other words, get ready for a LOT of Netflix and Chill in 2018.
Would You Buy or Sell Shares of Apple?
Market Cap: $903.78 Billion After being hit hard during the early-February market downturn, Apple's shares have gained 15% over the past three weeks. iPhone sales declined by 1.1 million units in 2017 and by 1.7 million units in the fourth-quarter alone, in part due to seemingly sluggish iPhone X sales (Apple does not supply sales data for specific models). Apple has reportedly slashed its production of the $1,000 smartphone by as much as half for the current quarter. Buffett's Berkshire Hathaway has a $28 billion stake in Apple.
Would You Buy or Sell Shares of Facebook?
Market Cap: $506.69 Billion The big question now facing Facebook is one of growth, and specifically, how much of it Facebook left in it. The social media behemoth already has over 2 billion monthly users and 1.4 billion daily users, accounting for impressive chunks of the active internet population of approximately 4.16 billion people. There are also some concerns that more and more advertisers will look to other social platforms like Twitter and Snapchat in light of Facebook's recent news feed changes that have put less of an emphasis on ads appearing in users' feeds.
Would You Buy or Sell Shares of Walmart?
Market Cap: $266.64 Billion Walmart is engaged in a fierce battle with Amazon for the hearts (and more importantly, the purse strings) of the growing cadre of online shoppers. It grew its online sales by 40% in 2017, though growth slowed to just 23% in the vital holiday quarter. Walmart is planning to double the number of locations that deliver groceries in 2018 as it tries to keep pace with Amazon's push into food delivery through its purchase of Whole Foods. Buffett owns a small position in Walmart.
Would You Buy or Sell Shares of McDonald's?
Market Cap: $119 Billion McDonald's shares had a big 2017, but were crushed last month after the fast-food giant's quarterly earnings disappointed. McDonald's new value menu of $1/$2/$3 items appears to be having some success though, and McDonald's Happy Meal sales should get a boost thanks to a new partnership with Disney, uniting the two brands for the first time in over a decade.
Would You Buy or Sell Shares of Alphabet (Google)?
Market Cap: $767.42 Billion Google, which is a division of holding company Alphabet, absolutely dominates global internet search, with the majority of the holding company's $109.65 billion in 2017 revenue being courtesy of search ads. YouTube is likewise dominating online video and making millionaires out of thousands of YouTubers. Google recently came under fire from best-selling author Charles Duhigg, who penned a NYT piece questioning whether Google's actions should be raising some serious antitrust concerns.
Would You Buy or Sell Shares of Snapchat?
Market Cap: $20.86 Billion It's been a rocky early ride on the stock market for Snap, the company behind social media app Snapchat, which is still hovering around its IPO price of $17. The app's recent redesign has met with mixed reviews, including a thumbs-down from Snap enthusiast Kylie Jenner in a tweet on February 21, which sent shares into a tailspin (yes, we're living in the Twilight Zone). The company has also been criticized for the immense bonus ($637 million) paid out to CEO and co-founder Evan Spiegel last year.
Would You Buy or Sell Shares of Disney?
Market Cap: $155.12 Billion After a monumental six-year run from mid-2009 to mid-2015 which saw shares rise by over 400%, Disney has since flattened out. Disney is a very interested observer in the current bidding war between Comcast and 21st Century Fox for British broadcaster Sky. Fox has already agreed to include whatever stake it has in Sky as part of its $52.4 billion asset sale to Disney that was announced in December.
Would You Buy or Sell Shares of Starbucks?
Market Cap: $80.26 Billion The coffee house that Howard Schultz built has expanded to over 27,000 locations around the globe and is now embarking on a new endeavor as it seeks further expansion: Reserve stores, which will offer baked goods and coffee (of course), but which will also feature full liquor bars. 1,000 Reserve stores are expected to be opened, though some of these will be converted from existing Starbucks locations.
Would You Buy or Sell Shares of Twitter?
Market Cap: $23.67 Billion Twitter's shares have hit a two-year high thanks to an early-2018 surge after the social media company turned a quarterly profit for the first time in its history in the final quarter of 2017. However, sluggish user growth is still a concern, as Twitter's monthly active user mark was flat quarter-over-quarter in Q4, at 330 million. On the positive side, daily active user numbers rose by 12% in 2017.
Would You Buy or Sell Shares of Amazon?
Market Cap: $713.58 Billion The e-commerce giant is basically obliterating the retail landscape in North America, disrupting virtually every retailer, regardless of whether they sell video games, groceries, or mattresses. Prime memberships have jumped past 90 million and those members are fiercely loyal to Amazon, outspending non-members by nearly twice as much annually.
Would You Buy or Sell Shares of Nike?
Market Cap: $106.08 Billion Nike's sales in the United States declined in 2017 and the company's iconic Jordan brand of sneakers was also supplanted by sales by Adidas shoes, which raises the specter that the long-retired NBA star's marketing power is running out of steam. Nonetheless, Nike's overseas growth has been strong, as are broader sneaker trends, which bodes well for the company long term.
Would You Buy or Sell Shares of Microsoft?
Market Cap: $705.46 Billion After a lost decade (the 2000's) during which its stock did a lot of nothing, Microsoft shareholders finally had reason to celebrate over the past five years, as shares have tripled in value. Microsoft has numerous cash cows, including its Office software, Windows operating system, its cloud division Azure, and its Xbox gaming division.
Would You Buy or Sell Shares of General Motors?
Market Cap: $55.89 Billion Despite massive profits since it re-hit the public markets in 2010 following its bailout and reorganization, GM hasn't received much love from investors. In fact, GM has returned $25 billion to shareholders in that time while its market cap has languished, essentially turning it into an income stock. GM's annual dividend yield stands at an impressive 3.86%. Buffett owns $2.05 billion in GM shares as of the end of 2017.
Would You Buy or Sell Shares of PayPal?
Market Cap: $93.46 Billion PayPal was spun-off from eBay in 2015 and the company has since surged past eBay in value, now being worth more than double its former parent company. Investors recently panicked after eBay announced that PayPal would not be its primary payments provider come 2020. PayPal isn't worried however, assuring investors that by 2020, eBay transactions would only account for a mid-single digit percentage of PayPal's transactions. PayPal also has plans to monetize its popular wallet app Venmo.
Would You Buy or Sell Shares of eBay?
Market Cap: $42.96 Billion The auction site, a staple of early e-commerce activity on the internet, had a rather bland 2017, with only mild revenue growth and declining margins. eBay's StubHub, the online ticket seller, grew to $4.5 billion in gross merchandise volume in 2017 but its growth slowed tremendously from the prior year (5% compared to 20%). eBay's new payments strategy has been met with positive reviews and should benefit sellers on its platform.
Would You Buy or Sell Shares of Delta Air Lines?
Market Cap: $38.10 Billion Warren Buffett is a big fan of airlines, telling CNBC this week that he would consider purchasing one with Berkshire Hathaway's oodles and oodles of cash (including a $29 billion windfall thanks to Trump's corporate tax cuts). Buffett owns shares of several airlines, including Delta. As with several other companies, Delta has recently been caught up in the intensifying gun control fight in the U.S., removing some of its support for the NRA by shooting down a former promotional discount that it had with the gun lobby.
Would You Buy or Sell Shares of Tesla?
Market Cap: $57.66 Billion Elon Musk's electric automaker has long been the poster boy of speculative growth stocks, having long ago surged past the market value of much larger automakers like GM and Ford. While it's undeniable that Tesla makes high-quality vehicles, there is a lot to be wary of, including rapid cash burn, mounting debt, and Model 3 production struggles.
Would You Buy or Sell Shares of Electronic Arts?
Market Cap: $38.21 Billion EA is front and center in the gaming industry's controversial usage of loot boxes, which have been described as a form of gambling by opponents (and now even lawmakers), driving people to keep spending money for a chance to win a random item. EA removed microtransactions from Star Wars Battlefront II after the game's loot boxes came under fire, and has blamed that decision for the game missing revenue targets. EA is working on a new system of microtransactions that will be added to the game in the near future. FIFA was again EA's top selling game last year, selling over 10 million copies on PS4 alone.
Would You Buy or Sell Shares of Home Depot?
Market Cap: $207.30 Billion Home Depot is coming off an impressive fourth-quarter that saw same-store sales surge by 7.5%, while revenue jumped to $23.9 billion. For now at least, Home Depot appears to be relatively safe from the retail black hole known as Amazon, which has had limited success gaining traction in the home improvement space. Rival Lowe's, which Home Depot has been outpacing in growth, recently unveiled a six-point plan that it believes will help it close the gap.
Would You Buy or Sell Shares of Activision Blizzard?
Market Cap: $55.29 Billion The World of Warcraft-maker pulled in $2.64 billion in revenue last quarter, powered by Call of Duty: WWII, which accounted for over $1 billion in sales in just six weeks. The game had sold over 16 million copies on PS4 and XB1 by December 23, making it the best-selling game of 2017. Nonetheless, the Activision division's revenue missed estimates by $60 million, while the company's Blizzard (Warcraft, Overwatch) and King (Candy Crush) divisions topped estimates.
Would You Buy or Sell Shares of Dollar Tree?
Market Cap: $24.34 Billion The discount retailer is in the process of revamping and improving on its execution and analysts expect a big 2018 for the company, buoyed by anticipated consumer tailwinds. However, Dollar Tree is also trading at a rich valuation to its historical average, which could signal that the stock is slightly overvalued right now.
Would You Buy or Sell Shares of FedEx?
Market Cap: $66.01 Billion Amazon recently announced that it will launch its own shipping service, which has some investors worried about the consequences for shipping companies UPS and FedEx. UPS, which relies far more heavily on Amazon for revenue than FedEx does, appears to have a lot more to lose from Amazon's aggression. Some analysts aren't overly concerned, stating that Amazon won't be able to compete with FedEx on price.
Would You Buy or Sell Shares of Kraft Heinz?
Market Cap: $81.70 Billion The gigantic food company was formed in 2015, with the merger of Kraft and Heinz being backed in part by none other than Warren Buffett himself, whose holding company contributed $10 billion to facilitate the deal. The company also ranks as Buffett's third-largest investment, with Berkshire holding a $25.32 billion position in it. Kraft Heinz has eight different brands that do at least $1 billion in annual sales, including Philadelphia (the cream cheese, not the city) and Maxwell House.
Would You Buy or Sell Shares of Monsanto?
Market Cap: $54.38 Billion The oft-vilified agri-food giant is in the process of being acquired by German pharmaceutical company Bayer for $66 billion, a deal which is still facing regulatory hurdles before approval. Bayer will likely need to sell its own vegetable seed business to appease antitrust authorities, who are concerned about the impact on competition and prices that could result from Bayer gaining a stranglehold on seeds. Buffett's Berkshire Hathaway owns 11.71 million shares of Monsanto worth $1.37 billion.
