If any investor has stood the test of time, it is Warren Buffett, and with good reason. For years, the “Oracle of Omaha” has had a rock-star-like presence in the investing world. His annual Berkshire Hathaway shareholders meeting draws thousands of loyal fans who are investors. Known for his long buy and hold strategies and his massive portfolio of public and private holdings, Buffett remains one of the preeminent investors in the entire world.
This week, everyone on Wall Street anticipates the first increase in the federal funds rate in years, and yields across the Treasury curve have all spiked after a recent round of buying last month prompted by the Russian invasion of Ukraine. In fact, both the five-year and 10-year notes hit 52-week yield highs on Monday. Top strategists are anticipating six to seven total increases this year, and perhaps three next year, depending on the inflation numbers, which have been at 40-year highs.
While most companies are not fans of higher rates, as they increase borrowing costs and the overall cost of doing business, some sectors welcome moves higher. We screened Warren Buffet’s Berkshire Hathaway portfolio looking for stocks that are likely beneficiaries of higher rates. These five are rated Buy at major Wall Street firms, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This stock has backed up recently and is offering the best entry point since late last year. American Express Co. (NYSE: AXP) provides charge and credit payment card products and travel-related services worldwide. Its products and services include payment and financing products network services accounts payable expense management products and services, and travel and lifestyle services.
The company’s products and services also comprise merchant acquisition and processing, servicing and settlement, point-of-sale marketing and information products and services for merchants, and fraud prevention services, as well as the design and operation of customer loyalty programs. It sells its products and services to consumers, small businesses, midsized companies and large corporations through mobile and online applications, third-party vendors and business partners, direct mail, telephone, in-house sales teams and direct response advertising.
Shareholders receive a 1.24% yield. Morgan Stanley has a $218 price target on American Express stock, while the consensus target is lower at $183.63. The shares closed trading on Monday at $172.79, up close to 3% for the day.
Bank of America
The company posted very solid fourth-quarter results, and Warren Buffett owns a stunning 1.1 billion shares. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, corporations and governments in the United States and internationally. It operates 5,100 banking centers, 16,300 ATMs, call centers and online and mobile banking platforms.
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