With a little more than a month left in this fiscal year, many investors are looking to rebalance their portfolios and reposition their holdings for what could be a more volatile year ahead.
Berkshire Hathaway (BRK-B) added $4.3B of exposure to Alphabet while reducing its Apple stake.
Apple has spent less on AI initiatives than its Magnificent 7 peers.
Netflix (NFLX) now trades at 32-times earnings after demonstrating improved monetization and profitability.
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In my personal portfolio, I’m taking a more risk-off approach to my equities holdings right now, and rebalancing to a greater weighting in fixed income. But I also understand that’s not the strategy the average investor will pursue.
Growth stocks have still outperformed their value counterparts on a year-to-date basis, and the immense rally we’ve seen in some of the top growth stocks in the market may have stalled for a short time, but investors banking on an incoming Santa Claus rally or more dovish monetary policy have reasons to hold onto their positions in these growth stocks and potentially consider adding for another near-term rally.
That’s not necessarily the base case I’d go with, but for those in this camp, here are three top millionaire-maker growth stocks that still look like solid buying opportunities right now.
I’ve long thought Alphabet (NASDAQ:GOOG) is one of the most fairly-valued mega-cap tech stocks in the market. It turns out I wasn’t the only one with this view, with Berkshire Hathaway (NYSE:BRK-B) recently adding $4.3 billion of exposure to this world-class search and cloud giant.
This bet is intriguing, considering the fact that Berkshire has been ramping down its Apple (NASDAQ:AAPL) holdings in recent months. More on that stock later.
But with a soon-to-be changing of the guard at the top, the question is whether Berkshire’s new investing team will hold the same approach as its predecessor. Assuming that’s the case, and Buffett had some say in this decision (he’s still the CEO), this is a very interesting add.
At around 24-times earnings, with a rock-solid balance sheet and plenty of growth upside driven by the company’s core cloud computing business (and less pressure on search after the company reported growth here, so no notable AI headwinds at least yet for investors to be concerned about), there’s a lot to like about how Alphabet is positioned for the long-term. This growth could be amplified, if the company’s Gemini large language model picks up steam.
Okay, now to the other Berkshire holding I think investors may want to pay attention to right now.
Apple is a world-class consumer discretionary company, with an absolutely iconic product in the iPhone that’s revolutionized how we interact in scale. With more than 60% market share in the U.S., this is the clear winner in terms of both market penetration and earnings growth potential over the long-term.
The company has done an amazing job of catalyzing its brand to drive higher than industry levels of profitability over time. With one of the most devoted customer bases out there, and network effects driven by the company’s product and services portfolio, this is a company that’s become expensive, but there’s a reason for that.
One of the more intriguing theses I’ve heard of late though as to why Apple could be undervalued relative to its Magnificent 7 peers is the lack of spending on AI initiatives. With other competitors breaking the bank to try to be the most aggressive in their pursuit of AI dominance, Apple has been a laggard. But with growing concerns around the future profitability of these investments, I think Apple could actually be sitting pretty.
I have to admit, Netflix (NASDAQ:NFLX) is a company I’ve been very bearish on in the past. Part of this had to do with the company’s valuation multiple and lack of profitability in past years. Though in more recent quarters, Netflix has shown its ability to monetize its user base, with rock-solid EPS growth figures that have resulted in the company essentially growing into its valuation multiple.
Now trading at a much more reasonable multiple of 32-times earnings, driven by high-margin growth and continuing monetization of the company’s free ad-supported tier, there’s a lot to like about both organic growth and earnings growth driven by improved efficiency and monetization efforts.
If Netflix can continue to release more than 1,000 new series and movies each and every year, this company has a model that could really take off. With more lower-cost international content driving a significant chunk of the views on Netflix’s core platform, this is a stock that could have plenty of room to run in a melt-up type situation.
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