Month: October 2022

With so many blue chip ASX 200 shares to choose from, it can be hard to decide which ones to buy over others.

To help narrow things down, I have picked out two that experts rate as buys right now. They are as follows:

CSL Limited (ASX: CSL)

The first blue chip ASX 200 share to consider is CSL. It is one of the world’s leading biotechnology companies, comprising the CSL Behring, CSL Vifor, and Seqirus businesses.

Combined, these businesses have a portfolio filled to the brim with life-saving therapies and vaccines. In addition, they all have burgeoning research and development (R&D) pipelines with potentially lucrative therapies to drive future growth. This is underpinned by CSL’s decision to reinvest approximately 10% of sales into R&D activities each year. This is a significant number and led to an investment of approximately US$1 billion in FY 2022.

Another positive that bodes well for the company’s performance in the coming years is the recent major improvements in plasma collections and the company’s new collection technology. The latter is expected to collect plasma more efficiently and deliver stronger yields.

Citi is positive on CSL and currently has a buy rating and $340.00 price target on its shares.

Woolworths Limited (ASX: WOW)

Another blue chip option to consider is Woolworths. It is of course the retail conglomerate behind businesses including Woolworths, Countdown, Everyday Rewards, and Big W.

It has been tipped as a buy by analysts at Goldman Sachs. They believe its shares are trading at an attractive level after recent weakness. Particularly given its digital and omni-channel advantage, which the broker expects to drive further market share and margin gains.

In fact, Goldman Sachs is so positive it has put the company on its coveted conviction list. It currently has a conviction buy rating and $44.10 price target on the company’s shares.

Another positive is that the broker is forecasting fully franked dividend yields of 3%+ in the coming years.

The post Here’s why experts rate these blue chip ASX 200 shares as buys appeared first on The Motley Fool Australia.

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More reading

• September was a shocker for the ASX 200, but how did the Woolworths share price stack up?
• Are CSL shares ‘starting to look more attractive’ in October?
• Did CSL shares manage to generate healthy returns in September?
• CSL share price jumps despite JP Morgan’s latest caution
• Woolworths shares: Buy, hold, or fold?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) finished 3.75% in the green today, but the Brainchip Holdings Ltd (ASX: BRN) share price lifted even higher.

The artificial intelligence company’s share price rose 5.33% today to finish at 89 cents.

Let’s take a look at why Brainchip shares had such a good day.

Tech shares rise

The Brainchip share price was not the only ASX tech share to finish the day on a high today. The Megaport Ltd (ASX: MP1) share price jumped 6.05%, while Appen Ltd (ASX: APX) rose 2.37% and Life360 Inc soared 8.19%. The S&P/All Technology Index (ASX: XTX) surged 4.84%.

Australian tech shares followed a similar trend to their counterparts in the USA. The technology heavy NASDAQ Composite Index (NASDAQ: .IXIC) rose 2.27% overnight.

Hope that the US Federal Reserve may not raise interest rates as much as expected helped drive market gains in America on Monday.

CFRA chief investment strategist, in quotes cited by CNBC, said:

Because the S&P was down more than 9% in September… because the ISM was weaker than expected – ditto for construction spending – people are now surmising – Hey, maybe the Fed won’t be as aggressive.

Technology shares are especially vulnerable to interest rate rises given their valuations are largely based on future growth prospects.

Meanwhile, the Reserve Bank of Australia (RBA) lifted interest rates by less than expected today.

The RBA raised the cash rate by 25 basis points to 2.6%. But, economists had predicted a 50 basis point rise. However, the RBA warned further rate hikes will be needed in the future to bring down inflation. Governor Philip Lowe said:

The board expects to increase interest rates further over the period ahead. It is closely monitoring the global economy, household spending and wage and price-setting behaviour. 

Brainchip was added to the ASX 200 in June this year. Brainchip reported a 1% drop in operating loss to US$8.56 million in the half year ended 30 June. Revenue soared 529% year over year to US$4.83 million. Brainchip did not pay a dividend.

Brainchip share price snapshot

The Brainchip share price has risen nearly 30% in the year to date, while it has soared 128% in the past year.

For perspective, the ASX 200 has fallen nearly 8% in the past year.

Brainchip has a market capitalisation of more than $1.5 billion based on the current share price.

The post Why did the Brainchip share price soar 5% today? appeared first on The Motley Fool Australia.

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More reading

• Why is the BrainChip share price struggling on Friday?
• Why did the BrainChip share price surge 7% today?
• Here are the top 10 ASX 200 shares today
• Why Brainchip, New Hope, Sayona Mining, and Talga are pushing higher
• Why Block, Brainchip, Domino’s, and Vulcan shares are sinking today

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd, Life360, Inc., and MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) posted its best performance in more than two years on Tuesday. The index closed 3.75% higher at 6,699.30 points.

The gain came amid news that the Reserve Bank of Australia hiked interest rates by 0.25% in October – just half of what many market participants were expecting. It’s the sixth consecutive month in which the official cash rate has been raised. It now sits at 2.6%.

The S&P/ASX 200 Materials Index (ASX: XMJ) led the gains, posting a 4.6% increase. The mining sector was likely boosted by new forecasts from the federal government tipping commodity exports to hit another record high this fiscal year amid rocketing lithium prices.

On that note, the S&P/ASX 200 Energy Index (ASX: XEJ) lifted 3.9% on Tuesday after the government tipped demand for coal to continue while oil prices took off.  

The Brent crude oil price gained 4.4% to US$88.86 a barrel on Monday while the US Nymex crude oil price rocketed 5.2% to US$83.63 a barrel.

At the end of today’s session, all 11 of the ASX 200’s sectors were in the green. But which share outperformed all others? Keep reading to find out.

Top 10 ASX 200 shares countdown

Today’s top performing ASX 200 share was lithium favourite Lake Resources N.L. (ASX: LKE). It gained 14.53% on Tuesday despite only silence from the company.

Today’s biggest gains were made by these shares:

ASX-listed company	Share price	Price change
Lake Resources NL (ASX: LKE)	$1.025	14.53%
Sayona Mining Ltd (ASX: SYA)	$0.255	13.33%
Pilbara Minerals Ltd (ASX: PLS)	$5.11	12.31%
Capricorn Metals Ltd (ASX: CMM)	$3.47	11.94%
Core Lithium Ltd (ASX: CXO)	$1.185	11.79%
Silver Lake Resources Limited (ASX: SLR)	$1.285	10.78%
Allkem Ltd (ASX: AKE)	$14.49	9.94%
Chalice Mining Ltd (ASX: CHN)	$4.08	9.68%
West African Resources Ltd (ASX: WAF)	$1.035	9.52%
Liontown Resources Limited (ASX: LTR)	$1.59	9.28%

Our top 10 ASX 200 shares countdown is a recurring end-of-day summary to let you know which companies were making big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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More reading

• RBA shock fuels the ASX 200 stock market rally… plenty of bargains on offer for beleaguered yet emboldened investors
• Why did the Lake Resources share price get smashed in September?
• Government tips Aussie lithium exports to surge 180%. Which ASX shares are in on the action?
• Why Allkem, Evolution, Paradigm, and Sayona Mining shares are zooming higher
• Why is the Core Lithium share price surging 7% today?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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S&P/ASX 200 Index (ASX: XJO) bank shares all lost ground in September.

Though all four of the big banks managed to outperform the benchmark index for the month.

How did ASX 200 bank shares track in September?

September lived up to its reputation as a poor month for stock market performance.

With investors fretting about high inflation, rising interest rates, and the spectre of recessions across major global economies, the ASX 200 finished down 7.3% from the closing bell on 31 August through to the final trading on 30 September.

As mentioned above, all of the ASX 200 banks beat that performance. Though some only barely.

Australia and New Zealand Banking Group Ltd (ASX: ANZ) was the best of the lot, down a slender 0.10% in September.

Part of that may be that ANZ had lost more ground that its peers in the prior months of 2022. So we may have seen some bargain hunting at play.

The bank also has seen its net interest margins (NIMs) improve amid the rate rises from the RBA.

In its FY22 third quarter update, ANZ reported a 0.03% lift in NIM. Looking ahead the bank said, “With interest rates projected to increase further in coming months, this is expected to be supportive for margins in the fourth quarter.”

Having covered the best performing ASX 200 bank share in September, we flip to the worst. Namely Commonwealth Bank of Australia (ASX: CBA). CBA saw its share price slide 7% over the month, barely edging out the benchmark index.

There was no real negative news from CBA over the month. But investors may be concerned over the premium the bank commands.

At 17.2 times, CBA shares trade with a significantly higher price-to-earnings (PE) ratio than its peers. ANZ, for example, trades at a PE ratio of 10.3. And with competition in the mortgage market heating up, CBA shares have come under some pressure.

And the other big banks?

Moving on to our last two ASX 200 bank shares, Westpac Banking Corp (ASX: WBC) finished September down 4.5% and the National Australia Bank Ltd (ASX: NAB) closed the month down 5.8%.

Both banks look to have largely gotten swept up in the wider selling that drove the benchmark index lower, with investors concerned about a possible uptick in bad debts and lower levels of new mortgage offerings erasing any benefits from higher NIMs.

Westpac and NAB trade at a higher PE ratio than ANZ, but significantly lower than CBA. NAB trades at a PE ratio of 14.6 times while Westpac has a PE ratio of 15.4 times.

The post Here’s how ASX 200 bank shares fared in the shocker month of September appeared first on The Motley Fool Australia.

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More reading

• What’s the outlook for ANZ shares in October?
• These ASX dividend shares have been tipped as buys by experts
• Why were so many CBA shareholders cashing out in September?
• Here are 2 ASX 200 dividend shares that analysts have slapped buy ratings on
• Will the Westpac share price rebound in October?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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September lived up to its reputation as a terrible month for markets this year. The S&P/ASX 200 Index (ASX: XJO) dumped 7.3% over the course of last month. And it wasn’t much better for the Woolworths Group Ltd (ASX: WOW) share price.

Stock in the supermarket operator fell 5.9% over the course of September, closing the month at $33.95.

That was despite some particularly exciting news being released by the ASX 200 favourite over that time.

Let’s take a look at what went wrong for the Woolworths share price in September.

What weighed on the Woolworths share price last month?  

The Woolworths share price struggled alongside the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) last month.

The sector dumped 5.8% in September. Though, that saw it post one of the best performances of the ASX 200’s 11 sectors.

It’s also worth noting that Woolworths’ closest peer, Coles Group Ltd (ASX: COL), saw its share price slip 6.4% over the course of last month.

There was plenty of news from Woolies’ camp over the 30 days ended 30 September.

Perhaps most exciting, was the finalisation of its acquisition of formerly-ASX-listed MyDeal.com.au.

The supermarket giant proposed to snap up an 80% stake in the online marketplace – thereby taking it off the market – in May for an enterprise value of $242.6 million.

MyDeal’s shareholders voted in favour of the plan early last month and it was implemented before September was out.

Additionally, Woolworths announced several leadership changes last month.

It revealed the appointment of Daniel Hake to the position of Big W managing director.

It also announced Von Ingram had been appointed to the role of managing director of Woolworths’ non-food retail businesses, including Big W, MyDeal, HealthyLife, and PetCulture.

Sadly, none of last month’s announcements proved enough to significantly boost the Woolworths share price.

At the end of September, it was 11.75% lower than it started 2022. For comparison, the ASX 200 dumped 14.7% over the first nine months of the year.

The post September was a shocker for the ASX 200, but how did the Woolworths share price stack up? appeared first on The Motley Fool Australia.

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More reading

• Woolworths shares: Buy, hold, or fold?
• What might the latest retail sales figures mean for ASX 200 consumer shares?
• Own Woolworths shares? Here’s some good news about your dividends
• 5 things to watch on the ASX 200 on Tuesday
• Why is the Woolworths share price having such a stellar run on Monday?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Whitehaven Coal Ltd (ASX: WHC) shares are having a roller coaster day today.

The coal producer’s shares are rising 5.58% and are currently trading for $9.65. For perspective, the S&P/ASX 200 Index (ASX: XJO) is rising 3.64% today.

Let’s take a look at what is impacting Whitehaven shares today.

Whitehaven shares fall, then surge

Whitehaven shares were in the red in earlier trade, falling 0.55% on yesterday’s close to $9.09.

Coal prices fell 8% overnight to US$399 per tonne after China pledged to raise coal production by 300 million tonnes.

Following the early drop, Whitehaven shares picked up amid news that Australian thermal coal exports will rise in FY23.

In an Industry Department quarterly resources and energy report, the Federal Government tipped that Australia’s total coal export value will hit $120 billion in the 2023 financial year.

Thermal coal export values are forecast to rise nearly 35% from $46 billion in FY22 to $62 billion in FY23. Meanwhile, the metallurgical coal export value is tipped to fall 12% from $66 billion to $58 billion.

The report predicted the metallurgical coal price would drop from US$404 per tonne in FY22 to US$283 per tonne in FY23.

However, thermal coal is tipped to lift from US$245 a tonne in FY22 to US$309 a tonne in FY23.

Whithaven share price snapshot

The Whitehaven share price has exploded 270% year to date, while it has risen 186% in the past year.

In contrast, the ASX 200 has shed 10% in the year to date and 8% in the past year.

Whitehaven has a market capitalisation of about $9.2 billion based on the current share price.

The post Whitehaven shares are being pulled in all directions today. Is this why? appeared first on The Motley Fool Australia.

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More reading

• Government says Aussie coal exports will hit record levels. Here’s which ASX 200 shares are cashing in
• These were the best performers on the ASX 200 in September
• If I’d invested $1,000 in Whitehaven Coal shares at the start of 2022, here’s what I’d have now
• Here are the top 10 ASX 200 shares today
• Why Cogstate, Mayne Pharma, Race Oncology, and Whitehaven Coal are charging higher

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Bad news for the US economy.

A drop in the Institute for Supply Management’s gauge of factory activity suggested the US economy may be faltering.

Good news for the stock market.

A faltering economy means the US Federal Reserve may not be as aggressive with its interest rate hikes.

Overnight on Wall Street, the S&P 500 index soared 2.6% higher, its best session since July. This came after a diabolical September on Wall Street, the worst in two decades.

Was this a dead-cat bounce amidst an ongoing bear market?

Place your bets, Foolish investors.

In the green corner we have Matt Maley, chief market strategist at Miller Tabak + Co.

“The market is oversold, and sentiment is extremely negative, so a bounce…even a sharp one…could happen at any time,” wrote Maley as reported on Bloomberg.

And in the red corner, we also have Maley, quoted in the same Bloomberg report as saying…

“However, we see lower-lows before the ultimate bottom is reached for this bear market… as the stock market has not fully priced-in a recession.”

If there is to be a next leg down in the stock market, you feel like it could come sooner rather than later.

Comments like these in the AFR from Federal Reserve Bank of New York president John Williams have previously sent the stock market into a spin…

“My view is we still have a significant ways to go,” he said, pointing to projections showing Fed officials expected to raise their benchmark interest rate to 4.6% by the end of next year, from its current level just above 3%.

Not today though. It’s a welcome relief for beleaguered stock market investors like you and me. 

Like a compliant puppy dog, the ASX 200 is following Wall Street higher, soaring 236 points or 3.67% higher to 6693. This comes after a horror September where the benchmark index fell 7.3%.

Mining stocks led the charge higher, with lithium explorer Sayona Mining (ASX: SYA) the best ASX 200 performer, gaining 14.22% to 25.7 cents on the back of a general market rebound and the announcement of a pre-feasibility study (PFS) to look at the potential production of lithium carbonate at the North American Lithium (NAL) operation. 

Capitalised at over $2 billion, Sayona Mining generated $0 in mining revenue in FY22 as it works towards “becoming a leading integrated producer and the largest in North America, amid accelerating demand from the battery and electric vehicle sector,” according to managing director Brett Lynch.

Potential indeed.

BREAKING

In breaking news, the RBA has added fuel to today’s stock market rally by only raising the cash rate by 25 basis points to 2.6%. 

The consensus amongst economists expected another 50 basis rise, reminding us once more of the old joke that economists have predicted six of the last two recessions. Or the change in central bank interest rates.

The RBA did say it still expects to increase interest rates further in the period ahead. But the slowing of the rate gains is the best case scenario in the short term for the stock market and the economy, assuming inflation can ultimately be tamed.

For the emboldened investor, the good news is that the year-long sell-off has left us with plenty of bargains to choose from, especially amongst the bombed-out small cap stocks. 

The post RBA shock fuels the ASX 200 stock market rally… plenty of bargains on offer for beleaguered yet emboldened investors appeared first on The Motley Fool Australia.

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More reading

• Why Allkem, Evolution, Paradigm, and Sayona Mining shares are zooming higher
• Why is the Sayona Mining share price rocketing 13% on Tuesday?
• Why is the Sayona Mining share price having such a rocky start to the week?
• Here are the top 10 ASX 200 shares today
• ASX lithium mania: Sayona Mining share price rocketing 8% today

Motley Fool contributor Bruce Jackson has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is having its best day in years.

The benchmark index was already up 2.4% at 2:30pm AEDT, following a strong run in US markets overnight.

Then the Reserve Bank of Australia (RBA) announced its interest rate decision.

The RBA opted to lift rates by a rather dovish 0.25% rather than the 0.50% increase markets had widely priced in. And the ASX 200 leapt 1.1% in the following minutes, to currently be up 3.6% for the day.

With the latest increase, the sixth month of rate hikes in a row, Australia’s official cash rate now stands at 2.60%.

The central bank first lifted rates from the all-time low of 0.10% on 4 May. At that point, ASX 200 investors had not experienced a rate rise since November 2010. Back then, the RBA raised the cash rate by 0.25% to 4.75%.

Today, the RBA board also increased the interest rate on Exchange Settlement balances by 0.25% to 2.50%.

What did the RBA report on its interest rate decision?

The RBA board said it opted for the lower 0.25% rate hike as the cash rate has already “increased substantially in a short period of time”. The board said it is assessing the outlook for inflation and Australia’s economy following the prior months of tightening.

The bank pointed to global factors as driving much of Australia’s inflation woes, adding, “But strong domestic demand relative to the ability of the economy to meet that demand is also playing a role.”

ASX 200 investors hoping to hear inflation has been tamed will be disappointed. The RBA said it expects inflation to increase further over the months ahead.

According to RBA governor Philip Lowe, “The bank’s central forecast is for CPI inflation to be around 7.75% over 2022, a little above 4% over 2023 and around 3% over 2024.”

The board noted the Australian economy was still “growing solidly”. August’s unemployment rate of 3.5% is the lowest in half a century. And wages growth is continuing to pick up pace.

What can ASX 200 investors expect next from the RBA?

ASX 200 investors should take note that the RBA reconfirmed its commitment to bringing inflation back down into its 2% to 3% target range “over time”. The central bank added, “further increases are likely to be required over the period ahead”.

According to the RBA release:

It is closely monitoring the global economy, household spending and wage and price-setting behaviour. The size and timing of future interest rate increases will continue to be determined by the incoming data.

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More reading

• Telstra share price trails the ASX 200 as data hack hits headlines
• 2 top Warren Buffett stocks to buy right now
• Why is the Woodside share price beating the ASX 200 today? 
• Amazon’s second prime day: Genius move or worrisome indicator?
• Government says Aussie coal exports will hit record levels. Here’s which ASX 200 shares are cashing in

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Telstra Corporation Ltd (ASX: TLS) share price is underperforming the market on Tuesday. Its weaker performance comes amid news that hackers accessed the personal data of thousands of current and former Telstra employees.

The historical hack has hit headlines little more than week after Optus revealed it was the centre of a cyber-attack that reportedly saw the data of nearly 10 million Australians briefly ransomed.

Right now, the Telstra share price is trading 0.52% higher at $3.86.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is up 3.41% and the S&P/ASX 200 Communication Index (ASX: XTJ) has lifted 1.89%.

Telstra share price underperforms on Tuesday

The Telstra share price is edging into the green on Tuesday. At the same time, the company is in the headlines as a previous data hack comes to light.

Hackers who had previously accessed the names and email addresses of staff employed by the telco prior to 2017 have now revealed the information.

It’s claimed they accessed the data through a third party previously responsible for Telstra’s staff rewards program.

A Telstra spokesperson says no customer account information was caught up in the attack. They believe the data has been published now in an attempt to benefit from the Optus breach.

Reporting across multiple news publications indicates 30,000 past and present employees have had their information published on the same forum as used in the Optus breach.

Telstra has informed both authorities and employees of the breach. It is also working to notify former employees despite the data representing ‘minimal risk’ to them.

Meanwhile, Optus has appointed Deloitte to lead a forensic review into its far larger cyberattack.

Optus CEO Kelly Bayer Rosmarin commented:

We’re deeply sorry that this has happened and we recognise the significant concern it has caused many people. While our overwhelming focus remains on protecting our customers and minimising the harm that might come from the theft of their information, we are determined to find out what went wrong.

The telco also revealed that 2.1 million Australians have had an identity document number exposed in the hack. Of those, 900,000 identifying numbers had expired when exposed.

The post Telstra share price trails the ASX 200 as data hack hits headlines appeared first on The Motley Fool Australia.

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More reading

• Here’s why this broker says the Telstra share price is great value in October
• 5 things to watch on the ASX 200 on Monday
• Brokers name 3 ASX shares to buy today
• ASX 200 dividend shares suffer September sell-off
• Could Telstra shares be set to benefit from the Optus hack?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Warren Buffett is well-known for his value-oriented approach to investing, but Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) also holds some intriguing growth stocks in its portfolio. With the growth-heavy Nasdaq Composite index now down roughly 31.6% across 2022’s trading, this could be the right time to heed one of Buffett’s most-quoted bits of investing wisdom: “Be greedy when others are fearful.” 

Two growth stocks in the Berkshire portfolio that look like strong candidates to apply that strategy to now are Amazon (NASDAQ: AMZN) and Snowflake (NYSE: SNOW).

1. Amazon

Amazon has been one of the most innovative and influential companies of the last quarter century. It spearheaded the growth of the e-commerce market and used its strength in online retail as a springboard into the cloud infrastructure space. Today, the company maintains leadership positions in both e-commerce and cloud services, and both segments look poised to benefit further from secular growth trends.

The online retail business is capital intensive, relatively low margin, and has been a drag on overall profitability lately, but the situation should improve over the long term as automation improves margins and the share of retail spending going to e-commerce continues to grow. While online retail accounts for the large majority of Amazon’s overall revenue, it’s actually the cloud business that is its crown jewel when it comes to profitability.

Amazon Web Services (AWS) leads the cloud infrastructure market and provides technologies that are the backbone for much of the modern internet and application services ecosystem. New websites and apps are coming online every day, existing ones are expanding their operations, and these trends have Amazon in a position to facilitate and benefit from the growth of the overall cloud software market. Even better, AWS is posting operating income margins north of 30%, and its sales growth of 29% in the company’s last quarter shows that demand is strong.

In addition to its core e-commerce and cloud services businesses, Amazon has also been making waves in digital advertising. It now trails only Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Meta Platforms (NASDAQ: META) in terms of market share in the US, and its leadership in e-commerce and cloud and data analysis resources could help it continue gaining share in the category. 

With the stock price down nearly 33% year to date and 38.6% from its high, Amazon stock is a worthwhile buy for long-term investors.

2. Snowflake

By some metrics, Snowflake is the most growth-dependent stock in the Berkshire Hathaway portfolio. It trades at roughly 33 times this year’s expected sales and has a market capitalization of roughly $56 billion, though its stock has fallen by roughly 48% across 2022’s trading. With that kind of valuation, the stock could see outsized sell-offs if pessimism continues to shake the broader market. But though it’s a somewhat uncharacteristic pick for Berkshire Hathaway’s portfolio, there are good reasons why Buffett was comfortable with the risks associated with it.

Snowflake has been posting impressive growth — revenue was up roughly 83.5% in the first half — and it appears to be building the foundations for a durable moat. Its Data Cloud platform allows businesses and organizations to combine and analyze data from Amazon, Microsoft (NASDAQ: MSFT), and Alphabet’s otherwise-siloed cloud infrastructure systems. This makes it possible to generate superior analytics insights and faster software responses, and this characteristic is helping Snowflake gain favor as a platform for developing and running cloud-native applications.

Snowflake also uses a consumption-based billing model — customers pay for services as they use them. This helps it attract new clients, and it also helps the company generate more revenue from customers as their usage scales. Last quarter, existing customers increased their spending by 71% on average compared to the prior-year period, pushing overall revenue up 81% year over year. With Snowflake still adding new customers at an encouraging clip and the company’s platform gaining favor as a foundation for software development, there seems to be a strong growth engine here.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 2 top Warren Buffett stocks to buy right now appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned.The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Meta Platforms, Inc., Microsoft, and Snowflake Inc. The Motley Fool Australia’s parent company recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, and Meta Platforms, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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