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<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Today, a trio of our contributors Motley Fool will highlight three of their favorite Buffett collections: & nbsp;Costco (NASDAQ: COST), Apple (NASDAQ: AAPL), and Phillips 66 (NYSE: PSX). "data-reactid =" 12 "> Today, a trio of our Motley Fool contributors will highlight three of their favorite entries in Buffett: Costco (NASDAQ: COST), Apple (NASDAQ: AAPL), and Phillips 66 (NYSE: PSX).
An investor puts coins in a piggy bank.
Source of the image: Getty Images.
The top name at warehouse retailers
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Leo Sun (Costco): Berkshire held nearly $ 1 billion worth of Costco shares at the end of 2018. The warehouse retailer, which locks buyers and subsidizes its low prices through paid memberships, has seen its shares climb. about 90% in the last five years. S & amp; P 500The gain of 50%. "data-reactid =" 35 ">Leo Sun (Costco): Berkshire held nearly $ 1 billion worth of Costco shares at the end of 2018. The warehouse retailer, which locks buyers and subsidizes its low prices with paid memberships, has seen its shares climb. about 90% in the last five years. S & P 50050% of gain.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Costco's economic model, its wide selection of products, the strength of its private label & nbsp; Kirkland and its focus on large bulk purchases have allowed it Amazon.com at the bay. Adjusted same-store sales increased 6.7% in the second quarter and online sales by 26%. Revenues from his contributions increased by 7.3%, fueled by price increases, and his renewal renewal rate was 90.7% in the United States and 88.3% worldwide. . "Data-reactid =" 36 "> Costco's business model, extensive product selection, strong private brand Kirkland and focus on large bulk purchases have allowed it to Amazon.com at the bay. Adjusted same-store sales increased 6.7% in the second quarter and online sales by 26%. Revenue from its contributions increased 7.3%, driven by higher prices, and its renewal rate was maintained at 90.7% in the United States and 88.3% worldwide. .
These figures indicate that Costco's business model is rigorous and has considerable pricing power. That's why analysts expect their sales and earnings to grow by 8% and 9%, respectively, this year. The Costco stock does not look cheap with 27 times its expected earnings, and its 1% forward yield does not offer much protection against downside risks. However, investors are willing to pay a premium for Costco for three main reasons.
First of all, like Amazon, it's one of the few retailers that can charge a subscription fee to buyers. Secondly, Costco plans to open 23 new warehouses this year, while many distressed retailers will reduce their brick and mortar footprint. Third, Costco is a bear market-friendly stock that has weathered previous crises. That's why Berkshire is accumulating shares of Costco and will probably buy more.
Take a bite of this stock
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Dan Caplinger (Apple):& nbsp; This is Warren Buffett's biggest stake, with the Oracle of Omaha holding nearly $ 40 billion worth of shares from the giant iDevice. Yet, the title has been one of Buffett's most controversial titles lately, as the stock price has been hit hard, despite headwinds for its most popular products. "Data-reactid =" 40 ">Dan Caplinger (Apple): This is Warren Buffett's largest stake, with the Oracle of Omaha holding nearly $ 40 billion worth of giant iDevice shares. Yet they have also been one of Buffett's most controversial titles in recent times, as his stock price has been hit hard, despite headwinds for his most popular products.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Apple had to deal with slowdowns growing with the latest models of his iPhone. Given the utility of older models, owners of iPhones have not upgraded their devices at the same speed as before. Homeowners who keep their old smartphones longer will reduce their sales volumes for Apple. The company must also consider that its high-end devices are out of reach of the typical consumer in many parts of the world, especially in emerging markets. "data-reactid =" 41 "> Apple has had to cope with slowing growth with the latest models of its iPhone.Because of the utility of older models, owners of iPhones have no reason to worry about this. They have not upgraded their devices to the speed that they had in the past.Owners who keep their old smartphones longer are reducing their sales volumes for Apple.The company must also consider the fact that its devices top are out of reach of the typical consumer in many parts of the world, especially in emerging markets.
Skeptics believe that Apple can not offer innovative products to follow in the footsteps of the iPhone and they have set the stock prices accordingly. Fourteen times the net profit, investors can buy shares of a mature company with the ability to maintain its profits – and even to offer modest growth – for years to come. It's far from being a risky market data today, and this makes this Buffett stock more interesting to watch closely, whether you're using your smartphones or not.
North American refiners have a global advantage
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Maxx Chatsko (Phillips 66): American shale oil is so abundant and cheap that it has changed global energy flows practically overnight. It also has another important feature: shale oil is very soft and sweet. That's the jargon of the industry for "this stuff requires a minimum of refining". In fact, this posed some problems for the country's refining infrastructure, which is designed to handle heavier crude grades. "Data-reactid =" 48 ">Maxx Chatsko (Phillips 66): American shale oil is so abundant and cheap that it virtually changed global energy flows overnight. It also has another important feature: shale oil is very soft and sweet. That's the jargon of the industry for "this stuff requires a minimum of refining". In fact, this posed a problem for the country's refining infrastructure, which is designed to handle heavier crude grades.
A shale oil pump at sunset.
Source of the image: Getty Images.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Although this has created bottlenecks for producers wishing to move product (which has somewhat softened as the construction of export infrastructure), refiners such as Phillips 66 have simply continued to import heavier crudes because they are generally cheaper than all other varieties – a lot cheaper – this has created a tremendous arbitrage opportunity. "data-reactid =" 70 "> Although this has created bottlenecks for producers looking to move a product (which is somewhat mitigated with the construction of infrastructure of 39), refiners such as Phillips have simply continued to import heavier crude as it is generally cheaper than all other varieties – a lot cheaper – this creates a great arbitrage opportunity.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "For example, while the price of US crude oil has been set with a discount of about $ 10 a barrel compared to the world benchmark called Brent crude in recent years, the price of a barrel of Canadian crude oil is currently set at $ 10 a barrel . American crude oil. Heck, in November 2018, Canadian crude oil was trading in hands for just over $ 11 a barrel. Total. The result: US refiners have benefited from extremely low raw material costs, but must sell their refined products at world market prices and make up the difference by making impressive profits. "Data-reactid =" 71 "> For example, the US crude The price of oil has been discounted about 10 dollars a barrel compared to the global benchmark called Brent in recent years, while the price a barrel of Canadian crude oil was currently set at $ 10 per barrel. American crude oil. Heck, in November 2018, Canadian crude oil was trading in hands for just over $ 11 a barrel. Total. The result: US refiners have benefited from extremely low raw material costs, but they must be able to sell their refined products at world market prices and pocket the difference for impressive profits.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "This trend was fully displayed when Phillips 66 reported fourth quarter profit 2018. The company's refining business generated a profit of more than $ 2 billion, compared to only $ 516 million for the same period last year. Every other segment – chemical products, datastream, midstream and marketing – Quarterly earnings also increased over the prior year. "Data-reactid =" 72 "> This trend was visible when Phillips 66 released its fourth quarter 2018 results. The Refining business generated more than $ 2 billion in earnings, compared to just $ 516 million for the same period in 2006 Both segments – chemicals, mid-range and marketing – saw their quarterly profit increase year-over-year.
Public reactions on transnational pipelines that would allow Canada to export more of its crude into Asia mean that the United States should have priority over its neighbor's heavy and cheap crude in the foreseeable future. This should allow Phillips 66 to continue to operate while offering the opportunity to invest in domestic infrastructure, such as its burgeoning chemicals facilities.
<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Stocks trade at less than 9 times future earnings , 0.4 times sales and only 8.5 times business value at EBITDA. The stock pays a 3.3% dividend and is trading 20% lower than its peak of 2018 – despite an ambitious share buyback program that had reduced the number of shares by 10%. Last year. In simple terms, this could be Warren Buffett's best game on the American energy revolution. "Data-reactid =" 74 "> Shares are trading at less than 9 times future earnings, 0.4 times sales and only 8.5 times the value of the company compared to EBITDA The stock pays a 3.3% dividend and is trading 20% lower than its peak of 2018 – despite an aggressive share buyback program that has reduced the number of shares by 10% Last year, in a nutshell, it could be Warren Buffett's best game on American energy revolution.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 75 "> More from The Motley Fool
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "John Mackey, CEO of Whole Foods Market, an affiliate of Amazon, is a board member of The Motley Fool. Dan Caplinger holds shares in Apple and Berkshire Hathaway (B shares). Leo Sun holds shares in Amazon and Apple. Maxx Chatsko has no position in the mentioned actions. Motley Fool owns shares and recommends Amazon, Apple and Berkshire Hathaway (B shares). The Motley Fool has stock of Oracle and offers the following options: long calls to $ 150 on Apple for January 2020 and short calls to $ 155 on Apple, January 2020. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy."data-reactid =" 84 ">John Mackey, CEO of Whole Foods Market, an affiliate of Amazon, is a board member of The Motley Fool. Dan Caplinger owns shares in Apple and Berkshire Hathaway (B shares). Leo Sun holds shares in Amazon and Apple. Maxx Chatsko does not hold any of the shares mentioned. Motley Fool owns shares and recommends Amazon, Apple and Berkshire Hathaway (B shares). The Motley Fool has stock of Oracle and offers the following options: long calls to $ 150 on Apple for January 2020 and short calls to $ 155 on Apple, January 2020. The Motley Fool recommends Costco Wholesale. Motley Fool has a disclosure policy.
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