Following in the footsteps of one of Wall Street's investment giants is a well-known strategy for those looking for alpha in the markets.
But is there a better blueprint out there? There are! Follow the movements of not just one, but two investment legends. And when you see two stock pickers leaning on the same names with near-unrivaled success, investors are surely interested to find out why they're attracting the attention of industry leaders.
In this case, we're talking about Warren Buffett and Ken Griffin, two advocates of different styles, but both extremely successful. The former is known for its adherence to value investing, while the latter has a penchant for quantitative investing techniques. But different styles don't mean they don't sometimes come to the same conclusion.
With that in mind, we opened up the TipRanks database to review the details of two stocks that both investment giants have made room for in their respective portfolios. It looks like these two are not alone in their support – both stocks receive a consensus rating of Buy Strong. Let's look at the details.
T Mobile USA (TMUS)
For our first Buffett/Griffin endorsed name, let's look at telecom giant T-Mobile US. The mobile network operator is the second-largest wireless carrier in the US and has managed to take on a significant chunk of the industry's expansion. He did this by greatly expanding his network and implementing creative marketing strategies to reach neglected areas in both urban and rural areas. The company also prides itself as a leader in 5G by boasting the largest, fastest and most acclaimed 5G network in the country.
Obviously, it's a massive operation with around 71,000 employees and a market cap of over $159 billion. At the end of the first quarter, the company's total customer base was a record 114.9 million.
However, not everything went smoothly this quarter. Revenue fell 2.4% year over year to $19.63 billion while missing Wall Street's requirement by $430 million. On balance, luck was greater, as earnings per share came in at $1.58, beating guidance of $0.48.
Stocks performed decently during last year's bear market but were excluded from this year's rally and are down 5% year-to-date.
Buffett and Griffin are obviously excited about this wireless giant. Buffett holds a large TMUS position with 5,242,000 shares. These are currently valued at over $705 million. In the meantime, it looks like Griffin took advantage of the drop in price to buy up shares. He bought most of his shares in the first quarter — 4,416,305 shares to be precise. Its total now stands at 5,014,198 shares, currently valued at $675 million.
Oppenheimer's Timothy Horan echoes the confidence of these investment professionals and remains so in the face of increasing 5G competition. The 5-star analyst writes, “We maintain our positive view of TMUS as a network and value leader that has outperformed its peers in the 5G era. However, we see his lead starting to narrow as VZ/T completes its C-band deployments. TMUS is making strides in rural and corporate sectors where it is underrepresented. The company now claims a 16.5% rural market share, up from the low double-digit share two years ago, and is nearing its 20% target for 2025. In the first quarter, it surpassed VZ in both new entrants and churn business phones.”
Those comments bolster Horan's Outperform (ie, Buy) rating, while his $190 price target implies the stock is poised to climb 41% in the coming months. (To see Horan's track record, Click here)
There is complete unanimity on the street on this issue. The stock's “Strong Buy” consensus rating is based on a Buy Only rating — 17 overall. At $179.53, the median target accommodates a ~34% 12-month return. (See TMUS Stock Forecast)
Now let's turn to another giant and one of the biggest brands in the world. Visa is a household name, a global financial services company that operates one of the world's largest electronic payment networks. It connects millions of merchants and financial institutions around the world, providing a reliable and efficient platform for electronic payments while facilitating secure digital transactions between consumers, businesses, financial institutions and governments. With a market capitalization of over $470 billion, the company ranks among the 15 most valuable companies in the world.
Visa is a giant that has nonetheless recorded steady growth, and that was the case in the most recent reporting quarter — for the second fiscal quarter of 2023 (the March quarter). Revenue hit $8 billion, up 11.1% year over year, beating the Street's forecast by $210 million. At the other end of the equation, earnings per share came in at $2.09, ahead of the $2.01 analysts were expecting. The company's total payments volume was $2.96 trillion in the second quarter, just above the consensus of $2.95 trillion.
Looking ahead, Q3 2023 net sales are expected to grow in the low double digits while adjusted operating expenses are expected to decrease by 2-3 percentage points each quarter through F4Q23.
Those results must have been gratifying for Buffett and Griffin. Buffett holds a significant V position, owning 8,297,460 shares worth about $1.9 billion, while Griffin doubled his holdings in the first quarter by adding 1,190,831 V shares. He currently holds a total of 2,251,070 shares worth over $514 million.
For Evercore analyst David Togut, Visa's value proposition makes it a stock to own, regardless of macroeconomic backdrop.
“Our top 3 picks for 2023, robust business model and sizeable moat around V's network offer a superior risk/reward trade-off with downside protection in an uncertain macro environment and significant upside opportunities in an emerging economy,” stated the analyst . “And while management's guidance for fiscal 2023 and our estimate do not imply a recession, we see minimal downside risk to the guidance given several potential macroeconomic and secular tailwinds: A) recovery in Asia-Pacific travel; B) further digitization of payment transactions; and C) robust value-added services revenue growth of over 20% at constant exchange rates in fiscal 2023 and beyond.”
To quantify this stance, Togut rates Visa stock as Outperform (ie, Buy), backed by a $300 price target. The implications for investors? Upside potential of ~32% from current levels. (To see Togut's track record, click here)
Overall, there's a lot of love for Visa on the Street. Barring one skeptic, all 19 other recent reviews are positive, making the consensus view here a strong buy. At $272.55, the average target means the shares will change hands at a premium of about 20% in a year. (See Visa Stock Forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is for informational purposes only. It is very important to do your own analysis before investing.